Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions —

Mr. Speaker: May I remind the House that brief supplementary questions and briefer ministerial replies enable many more right hon. and hon. Members to have their Questions called?

Oral Answers to Questions — HOME DEPARTMENT

Broadcasting Services

Mr. Brotherton: asked the Secretary of State for the Home Department when he expects to announce his plans for the future of broadcasting services.

The Secretary of State for the Home Department (Mr. Merlyn Rees): I refer the hon. Member to the reply that I gave to a Question by the hon. Member for Lewes (Mr. Rathbone) on 17th November last.

Mr. Brotherton: Is the Home Secretary aware that there is considerable concern, particularly among the broadcasting companies, about the lack of a decision on this matter, and that investment is being held up? Will he give a guarantee to the House that he will consider the conduct of such companies as ATV, which has been trying to put out a grossly distorted picture of life in another country?

Mr. Whitehead: Disgraceful.

Mr. Rees: I shall publish a White Paper early in the new year. The number of people who write to the companies arguing that they are biased one way is matched only by the number of people who write and say that they are biased the other way.

Mr. Whitehead: Entirely disregarding the second part of the supplementary

question by the hon. Member for Louth (Mr. Brotherton), because its content was so disgraceful, will my right hon. Friend say something about the prospects for the companies? Is it not a fact that the decision on the new franchises will have to be delayed if we do not get legislation very soon?

Mr. Rees: I think that it is quite clear that there cannot be legislation in the course of next year, and I am actively considering the speediest way of dealing with the existing companies.

Mr. Michael McNair-Wilson: Has the Secretary of State seen the comments of the Chairman of the BBC about the way it may be financed in the future? Will the White Paper contain proposals for the future financial structure of the BBC?

Mr. Rees: The White Paper will certainly discuss the future financial structure.

Offences (Midlands)

Mr. Eyre: asked the Secretary of State for the Home Department if he will make a statement on the rise in numbers of offences against persons and property in the Midlands over the past five years.

The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): Between 1971 and 1976, there was a rise of 26 per cent. in the number of indictable offences against persons and property recorded by the police in the West Midlands and East Midlands standard regions. This excludes Lincolnshire, which in 1971 included what is now South Humberside. This increase, though in itself disturbing is slightly lower than that for England and Wales as a whole.

Mr. Eyre: Against this deeply disturbing background, are the police establishment numbers realistically adequate in the densely-populated urban areas? Is the Minister aware that the West Midlands police force is now no fewer than 745 short of its established strength of 6,500 officers? How can the police adequately patrol the trouble areas in such circumstance, when what the people need is more protection in their home areas?

Dr. Summerskill: In spite of what the hon. Gentleman says, there has been a


10 per cent. increase in the strength of the West Midlands police force since the 1974 boundary changes. This is well above the national average, which is 7–8 per cent. I would also remind him of the recently-announced increase of an extra £9 million in the law and order budget.

Fire Brigades Union

Mr. Gow: asked the Secretary of State for the Home Department when he last met the leaders of the Fire Brigades Union; and if he will make a statement.

Mr. Skinner: asked the Secretary of State for the Home Department how many meetings he has had with leaders of the Fire Brigades Union; and if he will make a statement.

Mr. Whitehead: asked the Secretary of State for the Home Department when he next expects to meet the executive of the Fire Brigades Union.

Mr. Channon: asked the Secretary of State for the Home Department if he will make a further statement on the pay claim by firemen.

Mr. Merlyn Rees: I last met the full Executive Council of the Fire Brigades Union at the meeting between the Prime Minister and the Fire Brigades Union on 29th November. Since 14th November my right hon. Friend the Secretary of State for Scotland and I have been in close touch with representatives of both sides of the National Joint Council for Local Authorities' Fire Brigades. We are ready to meet them again at any time, and I last saw the Joint Secretaries on 8th December. On the general question of the firemen's pay claim, I refer to the statement I made to the House on 8th December.

Mr. Gow: Does the Home Secretary think that there is room, in any formula that may be arranged for the settlement of this strike, to follow up the suggestion, made by my right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw), that part of the deal should be that the Fire Brigades Union would give up the right to strike as Dart of the settlement?

Mr. Rees: Whatever the merits of discussion of that suggestion are—and I personally do not think that there are any—negotiations are taking place now, and I believe that negotiations are best caried out across the negotiating table.

Several Hon. Members: rose—

Mr. Speaker: I shall call those hon. Members whose Questions are being answered.

Mr. Skinner: Does my right hon. Friend accept that the statement by the TUC Finance and General Purposes Committee, issued the other week, was a body blow to the Fire Brigades Union? Will he now acknowledge that the TUC General Council could well overturn that decision when it meets on 21st December? Will he take that factor into account, and accept the advice of Terry Parry this morning to advance the timetable and put more money on the table now?

Mr. Rees: The Government have made their view quite clear. The offer that the local authorities put forward is really a remarkable one and something that I believe is beginning to be understood. Let the negotiations carry on.

Mr. Whitehead: Is my right hon. Friend aware that the public and, indeed, many firemen regard the proposals that he put forward as an honourable basis for a settlement of this dispute? Will he confirm, however, that for many firemen, particularly in my own area, some parts of the NJC package are negotiable—not the 10 per cent. figure and the guidelines, but matters such as the precise introduction of the 42-hour week and what goes with it?

Mr. Rees: The question of the 42-hour week is for negotiation. I am sure that hon. Members on both sides have looked at the feasibility study on the 42-hour week. It raises a large number of issues, and, obviously, it is negotiable.

Mr. David Howell: Does the Home Secretary agree that, while we all want to see this strike settled as soon as possible, if it goes on over Christmas this will be a particularly risky time for domestic fire dangers and also a very rough time indeed for those having to perform the fire-fighting services? Will he, therefore, reassure us that those who are carrying out these duties have the


full equipment available to them to carry them out most efficiently? What further steps have been taken since we last discussed this matter to train the troops to carry out the basic fire-fighting services and to use the more complex equipment that ought to be available to them?

Mr. Rees: I am sure that precautions are necessary. The number of fires has fallen and, although it is rising again, I understand that it is not back to the pre-strike level. On the question of the use of fire-fighting equipment, I am following the advice of the Chief Inspector of Fire Services. I am not in business to play politics about it. I know from the chief inspector's advice that to play about with modern equipment would be a foolish thing to do, and I am not prepared to depart from the professional advice that I have received.

Mr. Madden: Does my right hon. Friend agree that, in view of the most unfortunate experiences of the firemen as the victims of successive incomes policies under successive Goverments, there is suspicion about whether the guarantee formula is fire-proof? Does the Home Secretary understand that there needs to be an interim settlement now to make the whole package acceptable, and that it needs to be brought forward before Christmas if an honourable settlement is to be secured?

Mr. Rees: On the question of the guarantee, the Government have given their word about the phasing, and we stick to that. Over the weekend in my own constituency I was asked what would happen if there were a change of Government, and whether the guarantee could be banked on in that circumstance. It is not for me to say anything about that. I simply give the word of the Government now.

Mr. Bowden: If the present round of talks unfortunately fails, will the Home Secretary consider the possibility of himself holding a tripartite meeting with the union and the employers to discuss the specific point of trying to prepare and agree a productivity deal that would enable the working week to be reduced from 48 hours to 42, and for overtime to be paid immediately? I think that that would get the firemen back to work very quickly.

Mr. Rees: I only advise the hon. Gentleman to read the feasibility study on the 42-hour week, which shows the hours offered for work—I am not getting involved in the silly argument about firemen being there to wait for fires of course, they are—and look at the great differences between one brigade and another. That may well be the reason why the immediate productivity discussion has not got very far. But it is up to the negotiating body to look at these matters.

Public Meetings and Marches

Mr. Frank Allaun: asked the Secretary of State for the Home Department if he will now make a statement on the outcome of his consideration of arrangements concerning public meetings and marches, with particular reference to those by racialist organisations.

Mr. Merlyn Rees: I am continuing to consider the law on public order. The law on incitement to racial hatred has only recently been strengthened, but I am also considering its adequacy in the light of recent events.

Mr. Allaun: But since incitement to racial hatred is illegal, will the Home Secretary, without further inaction, ban all marches and public meetings by the National Front, which admits that it is a racialist party, or by any other racialist organisation?

Mr. Rees: The question of incitement is a matter for the law, and there were many discussions on this during the passage of the Criminal Law Act, which amended the Public Order Act. As Home Secretary, I shall never be in the position that I was in in Northern Ireland—I grant, in a different context—of saying that I will ban a march on a subjective evaluation on my part, however much I detest the views of the people who are going to march. The best way is to do that through the process of law.

Mr. Alan Clark: Leaving aside all the humbug about racialism, will the Home Secretary tell the House how many members of the so-called Socialist, so-called Workers' Party have been charged with violence against the police, and how many members of the National Front have been charged with violence against the police? If he does not have those figures in his brief—the Home Office is not too keen


about producing figures that it does not like—perhaps he will hazard a guess on the distinction and ratio.

Mr. Rees: The hon. Gentleman is extremely foolish in his latter remarks, but, taking his views for what they are worth, the policy of the National Front—and he would know a great deal about that—[HON. MEMBERS: "Oh."] The hon. Gentleman studies the matter and is always talking about it. He knows a great deal about it. Of course the National Front's policy is not to attack the police. Having said that, however, I hold not the slightest brief for the Socialist Workers' Party. It has nothing to do with anything that I believe in.

Mr. Abse: Would it not be a contribution to preventing people from attending racialist meetings if the Home Secretary were to consider amending the Rehabilitation of Offenders Act so that it would be known to the general public that those who organise these meetings—like Tyndal and Webster—are people with criminal records who have served sentences of imprisonment for acts of violence? Would it not be wise to alter the law so that people understand how many people in the National Front are ex-convicts?

Mr. Rees: Just as in the case of the SWP, I am picketed frequently by the National Front, and a funny bunch of people they are when one sees them at close quarters. I am having a look at the question of amending the law to see whether anything can be done.

Mr. Lawrence: Does not the Home Secretary consider that there is an urgent case for simplifying the law on public order and codifying it so that everybody knows exactly what it is?

Mr. Rees: I bow to the hon. Gentleman's knowledge of the law, but I understand that the Public Order Act is codified. I have talked to chief constables about aspects of the Act concerning, for example, matters of notification, on which, much as there may be a case for change, there is no major problem. The problem is mainly on the matter of incitement that my hon. Friend the Memlearned Member for Burton (Mr. If I have misunderstood the hon. and ber for Salford, East (Mr. Allaun) raised.

Lawrence) on the question of codification, I shall willingly look at the matter.

Vandalism

Mr. Steen: asked the Secretary of State for the Home Department what steps he is taking to contain the rise in numbers of acts of vandalism in urban areas.

Mr. David Hunt: asked the Secretary of State for the Home Department what steps he is taking to contain the rise in the number of acts of vandalism in urban areas.

Mr. Lawrence: asked the Secretary of State for the Home Department what steps he is taking to contain the rise in the numbers of acts of vandalism in urban areas.

Mr. Anthony Grant: asked the Secretary of State for the Home Department what steps he is taking to contain the rise in the numbers of acts of vandalism in suburban areas.

The Minister of State, Home Office (Mr. Brynmor John): As my hon. Friend the Under-Secretary of State stated in a reply to a Question by my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) on 17th November, it was generally agreed at a conference that my right hon. Friend held in April that measures to counter vandalism are best planned and organised at local level. The Department is continuing work on research, publicity and the co-ordination of information, and is in touch with other Government Departments for those purposes.

Mr. Steen: How many working party reports on vandalism has the Home Secretary received on which no action has been taken in the last four years?

Mr. John: There has been one report, published in 1975, the effect of which was to put forward practical suggestions. Over 18,000 copies of it have been distributed in order to deal with matters at local level. But I repeat to the hon. Gentleman, who does not seem to have understood my answer, that it is agreed by all people, including the relevant police forces and local authorities, that vandalism is best tackled at local level by local arrangements and co-ordination.

Mr. Hunt: Does the Minister agree that the increase in vandalism in areas like Merseyside is giving rise to increasing concern? If so, will he agree to take positive action to bring police establishment figures up to realistic levels, and also to take action to reform the Children and Young Persons Act so that we may have real protection for people and property?

Mr. John: The latter part of the hon. Gentleman's supplementary question was so wide and generalised that I cannot possibly say that the reform of the Children and Young Persons Act would have any effect upon vandalism. In reply to the first part, I repeat what my hon. Friend has just said—that inner city and large city police strengths have gone up considerably, and that they are well above the level of three years ago.

Mr. Lawrence: Is the Minister aware that vandalism will be diminished only if offenders are put in fear of the consequences of being caught? What have his Government done to frighten young potential offenders away from committing crimes?

Mr. John: Quite apart from the fact that the Criminal Law Act, which increased penalties with regard to vandalism, has just been enacted by this House, I should have thought that the increase in police strength, and therefore the greater certainty of detection, was in itself a deterrent. But I readily concede that it is not for the police alone to deal with this matter; many other people need to co-operate in tackling vandalism, particularly parents and other members of society, by reporting acts of vandalism that they see.

Mr. Loyden: Does my hon. Friend agree that one of the root causes of vandalism is the environment in which many young people live in inner cities, the level of unemployment among young people, and the lack of opportunities? Is it not a fact that until those matters are taken in hand and resolved, vandalism will continue to be a problem?

Mr. John: My hon. Friend says that the problem will not be solved until certain matters are resolved. I agree that part of the problem is as he said. I do not think that it is the sole cause of vandalism, unfortunately, but he will be

encouraged by the publication today of the Inner Urban Areas Bill.

Mr. Sims: If the Minister accepts that one of the best deterrents to the vandal is the prospect of a policeman strolling round the corner at any moment, why are the Metropolitan Police limited in the extent to which they can do his by restrictions on overtime?

Mr. John: I am informed by the Commissioner that overtime is a matter for his operational judgment. It is nothing to do with the Home Office, and I should have thought that as the new Commissioner has come in with universal praise he ought to be trusted in his judgments until evidence proves the contrary.

Violent Crimes

Mr. Durant: asked the Secretary of State for the Home Department what was the percentage increase in the number of recorded crimes of violence against the person in 1976, as compared with 1966.

Mr. John: In England and Wales, the number of indictable offences of violence against the person recorded by the police increased by 191 per cent. in 1976 as compared with 1966.

Mr. Durant: Does the Minister agree that those figures are horrifying? Is he aware that in the Thames Valley area this year crime has increased by 26·4 per cent., as against only 9 per cent. in the Metropolitan district? Will the Home Secretary approach the Chief Constable of the Thames Valley police to see what special factors there are in that area? Does he agree that shortage of police, because of the pay situation, is one of the prime factors?

Mr. John: My right hon. Friend will approach the Chief Constable of the Thames Valley area, but nationally—these figures are provisional, and I do not put them forward with great certainty—the fact is that for the second and third quarters of this year there were rises of only 1 per cent. and 3 per cent., compared with last year's figures for crimes of violence.

Mr. Corbett: Can my hon. Friend confirm that over the past 10 years there has been a big increase in both the detection and the coviction rate?

Mr. John: That is true. The detection rate and the cleared-up rate of such crimes is well over double that for other crimes, such as theft.

Mr. Hal Miller: asked the Secretary of State for the Home Department how the percentage increases in crimes against the person has differed between urban and rural areas over the past five years.

Mr. John: The statistics of recorded crime that are centrally available are for each police area as a whole and do not distinguish between urban and rural areas. The comparison sought cannot therefore be made.

Mr. Miller: Does the Minister understand that there is widespread concern throughout an area such as my constituency, where the village policeman has disappeared and where there has been an increase in police strength in Redditch New Town? Will he take action to increase the establishment of the West Mercia constabulary?

Mr. John: There are two points here. First, I have made it clear that I am concerned with the rise in crimes of violence, and other crimes, too. No one likes the present explosion of crime which has occurred not only here but in the whole of the Western world. It is police strength that needs to be increased, not establishments. Establishments do not pound a beat.

Armley Prison

Mr. Joseph Dean: asked the Secretary of State for the Home Department if he has received any correspondence relating to the conditions in Armley Prison; and if he will make a statement.

Dr. Summerskill: My right hon. Friend has received four letters arising out of the publicity recently given to complaints about the treatment of prisoners at Leeds Prison who are removed for their own protection under Prison Rule 43 from association with other prisoners not similarly segregated. The complaints are alleged to have been made by one such unnamed prisoner. It is at present unavoidable that Rule 43 prisoners at Leeds have to spend long periods each day in their cells, but my right hon. Friend is satisfied that all the specific complaints of ill-treatment are without foundation.

Mr. Dean: Does the Minister agree that if the contents of the letter being circulated in the Yorkshire area by PROP axe unfounded, the contents of that letter are an unwarranted slander on the staff at Armley Gaol, Leeds, who are doing a first-class job under very difficult and overcrowded circumstances?

Dr. Summerskill: I can confirm that the 13 points made in the letter to which my hon. Friend referred are without foundation. I have nothing but praise for the prison officers at Leeds Prison, who are working in very difficult circumstances.

Television Advertising

Mr. Loyden: asked the Secretary of State for the Home Department if he will raise with the Independent Broadcasting Authority the operation of its code of practice on television advertising, and, in particular, the matter of Christmas television advertising of toys at times when children are likely to be watching.

Mr. John: These are matters for the Independent Broadcasting Authority under the IBA Act 1973. The Annan Committee recommended, however, that there should be no advertisements within or between children's programmes and that the advertising of products or services of particular interest to children should not be shown before 9 p.m. We are considering this recommendation in the light of the comments that we have received on it.

Mr. Loyden: I thank my hon. Friend for his reply, but will he take this matter seriously, because in my view and in the view of many of my constituents, grossly exaggerated visual claims are made by television, not only on this product but on other products? I believe that that part of consumer protection needs tightening up.

Mr. John: Nothing in my answer should lead my hon. Friend to believe that I do not take it seriously. We are considering the Annan Committee's recommendations most seriously and I shall certainly look at this aspect of it, because I understand the points that my hon. Friend is making.

Mr. Brotherton: Does the Minister agree that the responsibility for children


buying toys lies not with the Independent Broadcasting Authority but with the parents?

Mr. John: Yes, but I think that that is a simplistic view, which one would expect from the hon. Gentleman. He knows the powerful effect of advertising in the Western world.

Mr. Whitehead: Will my hon. Friend discount the last statement, yet again, and take on board the fact that many Labour Members know that children in lower-income families can be brainwashed by these advertisements? That is why the Annan Committee was against advertising during children's programmes.

Mr. John: I accept what my hon. Friend said. I believe that the Annan Committee made its recommendation after careful study. It therefore behoves us, in our turn, to give the report equally careful study.

Departmental Correspondence

Mr. George Rodgers: asked the Secretary of State for the Home Department what steps he is taking to expedite replies to hon Members of Parliament who have submitted correspondence to his Department.

Mr. Merlyn Rees: The arrangements for handling hon. Members' correspondence are kept under review and some procedural changes were introduced earlier this year following a special survey. Every effort is made to reply as quickly as possible, but many letters require detailed inquiries outside the Department and delay is sometimes inevitable.

Mr. Rodgers: I appreciate the vast volume of correspondence directed towards my right hon. Friend's Department, but is he aware that the simple fact is that Back-Bench Members frequently have to wait several months for a reply to a straightforward query? In this circumstance, will he press for additional staff to be recruited, or consider pressing the Prime Minister for a transfer of some of his responsibilities to another Department?

Mr. Rees: The last point is not applicable because wherever it goes the query has to be dealt with. I have considered this very carefully. What arises with most

correspondence to the Home Office is that it has to be sent out to a local police force or to a prison. It is not just dealt with in the Department. There are legal considerations. Indeed, I dare not express a view on one matter about which my hon. Friend has been corresponding with me until certain inquiries are made, and in most cases that is what is involved. It is implicit, from the nature of the letters that we get in the Home Office, that we have to be extremely careful, because we may end up being quoted in courts and we must not reply hastily or in slipshod fashion.

Mr. Costain: We know the Home Secretary's difficulties in replying to letters, but will he give us a reasonable estimate of when an hon. Member may expect a reply to a letter? For instance, I have written a letter to his Department saying that an answer given in the House was highly inaccurate. Surely that is a matter which should be corrected at an early stage. When may I expect a reply to that letter?

Mr. Rees: Without looking at that I cannot give an answer, but I am concerned about this. We have had an O and M study of the matter. Apart from extra staff, it is implicit in the nature of the stuff that comes to the Home Office that great care has to be taken over the reply. I apologise if there has been the sort of slip-up to which the hon. Gentleman referred.

Albany Trust and Princedale Trust

Sir Bernard Braine: asked the Secretary of State for the Home Department what annual grants of taxpayers' money have been made to the Albany Trust and the Princedale Trust; and what are the total sums so far advanced to each of these bodies.

Mr. John: The total sums paid by the Voluntary Services Unit since 1974–75, when the grants began, are £43,625 to the Albany Trust and £86,000 to the Prince-dale Trust. A final instalment of £3,375 from the 1977–78 grant authorised for the Albany Trust remains to be paid. I will send the hon. Member the annual breakdown of these figures.
The Department of Education and Science provided a grant of £5,717 to the Albany Trust in 1976–77 and has so


far paid £2,174 in the current financial year.

Sir B. Brain: Is the Minister aware that there is evidence—which I can supply to him if he has not seen it—that both these trusts have given encouragement and publicity to the Paedophile Information Exchange, an organisation which exists as openly dedicated to the sexual corruption of children? Before paying any balance of grants, or before renewing any such grants, will the Minister obtain assurances that public money is not being used to help a disgusting organisation which most people would regard as having criminal objectives?

Mr. John: When I met a delegation led by the hon. Gentleman's hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight), I did such research. I am satisfied that no public money is being used for any propaganda purposes on behalf of such an organisation as the hon. Gentleman mentions, but he and I can correspond if he thinks that evidence exists for his view. I am satisfied that it does not.

Shoplifting

Mr. Adley: asked the Secretary of State for the Home Department if he is yet in a position to provide information about the percentage of people on shoplifting charges who are first-time offenders on any criminal charge; and what importance he attaches to this statistic in assessing the reason for the high coincidence between shoplifting allegations and self-service shops and stores.

Mr. John: The most recent information available to me is based on a sample of persons convicted of shoplifting in January, 1971 in England and Wales. Sixty per cent. of the males and 81 per cent. of the females in that sample had no known previous convictions. The figures throw no particular light on the causes of shoplifting.

Mr. Adley: Even though those statistics are now six years old, are they not of great concern to the hon. Gentleman? Is he aware that an organisation calling itself the Association for the Prevention of Thefts in Shops has been set up by the stores, with ample funds, which implies that the trading methods used by

self-service stores in no way affect the increase in shoplifting charges? The statistics also seek to cover up the fact that up to 70 per cent. of stores' losses are caused by thefts by staff in the shops. Will he accept the principle that self-service trading results in increases in shoplifting?

Mr. John: The hon. Gentleman and I have discussed this matter on a number of occasions. He will know that the Home Office research unit is conducting a project on shoplifting—a project which will look at shops, the ports and the police. At the moment it is studying trading practices in shops. It hopes to report on that later in 1978, and we hope to publish the report in 1979.

Sir A. Meyer: Is the hon. Gentleman satisfied that police forces throughout the country are made aware of the fact that it is all too easy for people without any criminal intent whatever to find themselves held on shoplifting charges, and that the mere appearance of these people in court can be damaging to the whole of their lives? Is he satisfied that police forces are well aware of that in bringing prosecutions?

Mr. John: Of course I understand, and I am concerned, that innocent people may be brought up on charges that are found not to be proved. I am concerned also that so many first-time offenders are convicted of that offence. I have no reason to doubt that police forces are well aware of this phenomenon.

Television Licences

Mr. Madden: asked the Secretary of State for the Home Department what representations he has received about the introduction of a scheme whereby all retired people living alone are eligible to either a free or a half-fee television licence.

Mr. Edwin Wainwright: asked the Secretary of State for the Home Department what recent representations he has received on the granting of concessionary television licences to elderly citizens who are living on their own and are not under the coverage of a warden's system.

Mr. John: Representations have been received this year from two hon. Members and from several members of the


public suggesting television licence concessions for pensioners living alone. The Government are currently considering the question of licence concessions in the light of the Annan Committee's recommendation that no further concessions should be introduced.

Mr. Madden: Can my hon. Friend confirm that the hierarchy of the British Broadcasting Corporation is clamouring for what it calls a substantial increase in the licence fee? Does he agree that if that came about it would represent a substantial burden on the shoulders of many retired people living alone? Is it not high time that these people were given either a free television licence or a half-rate licence?

Mr. John: What the BBC clamours for—as my hon. Friend puts it—and what the Home Secretary judges to be a proper basis for television licensing may well be different things. The Annan Committee studied this matter and came to the conclusion that no further concessions should be introduced. Such a concession would have an implication in respect of licence fees for all other people.

Mr. Henderson: Would not the Minister consider a system similar to that for motor vehicle licences, where people who give up the use of a television set during the period of a year should be entitled to a refund for the remainder of that year? Is he not aware that this causes considerable annoyance to people when it happens?

Mr. John: Yes, I am well aware of that, but this question arises in particular not out of concessions to elderly people but more generally. It has been found impracticable to introduce such a system at the moment, but we are continuing to give it thought.

Mr. Alexander W. Lyon: The Annan Committee could be wrong about the television licence. Is it right to go on with a poll tax of this kind which is increasing in size very considerably and bears heavily on the poorest part of the population? Cannot BBC revenue come out of taxation?

Mr. John: Nothing that I suggested was meant to imply that I believed that the Annan Committe ewas infallible. That

is why we are studying its findings with such care. We want to sift out those recommendations which we believe ought to be implemented from those that ought not. But when the Annan Committee studied this matter with care it came to the conclusion that revenue should continue to be raised by a licence fee.

General Elections (Deposits)

Mr. Grocott: asked the Secretary of State for the Home Department whether he will introduce legislation to increase the deposit for candidates at General Elections to the level that in real terms would be equivalent to the £150 that was introduced in 1918.

Mr. John: The Government consider that this matter should be considered by a Speaker's Conference on Electoral Law before amending legislation is prepared.

Mr. Grocott: It is not a fact that it is far too easy to stand for a parliamentary election, just for £150, Some people have not the remotest hope or intention of getting elected. The sum of £150, bearing in mind that it gives a free post to upwards of 100,000 people, is remarkably good value for even a commercial organisation. Is it not time that this deposit was increased?

Mr. John: I accept many of the points that my hon. Friend makes. The deposit was set at £150 in 1918. The comparable figure today would be £1,250. But, as I have said, this matter, which is concerned with electoral law, would best be considered by a Speaker's Conference. It is a great pity that no agreement has been arrived at about the setting up of a Speaker's Conference.

Mr. Cormack: Would the adoption of this suggestion be a suitably festive gesture to the hon. Members who sit on the Liberal Bench?

Mr. Wrigglesworth: Does my hon. Friend agree that it will be advisable to have the Speaker's Conference as quickly as possible because the level of the deposit has fallen so low that frivolous candidates can misuse the opportunity to advertise their interests in an election? Will my hon. Friend treat this as a matter of great urgency?

Mr. John: Again, I am constantly being asked to do something from which


I do not dissent. I regard this matter as serious and I think that a Speaker's Conference should meet as soon as possible. But my hon. Friend will know that that can be arranged only by agreement.

Criminal Responsibility

Mr. Michael McNair-Wilson: asked the Secretary of State for the Home Department if he will seek to lower the age of criminal responsibility.

Mr. John: No, Sir. It would, in my view, be a retrograde step to lower the present age of 10 years, fixed by the Children and Young Persons Act 1963, below which it is conclusively presumed in law that a child cannot be guilty of any offence.

Mr. McNair-Wilson: Has the Minister no further proposals for coping with the gangs of children under 10 years old, which are involved in so much of the present wave of vandalism?

Mr. John: First, there is the question of what evidence there is about this, other than a subjective impression. But such children can be brought before the juvenile court as being in need of care and control, on the ground that they may be outside parental control, and if that is so an order can be made, for example, binding over the parents. I am satisfied that the present powers are sufficient for those purposes.

Mr. Kilroy-Silk: When does my hon. Friend intend to raise the age of criminal responsibility?

Mr. John: When I am satisfied that it is the right step to take.

Mr. Fairbairn: Will the Minister travel over the border, where he will find that we have a much lower age of consent and no harm arises?

Mr. John: I am not sure whether I should assent to the proposition that we were discussing the age of consent.

Child Pornography

Mr. Alan Clark: asked the Secretary of State for the Home Department if he has completed his review of the problem of child pornography; and if he will make a statement.

Mr. John: No, Sir. We continue to examine the information and representations that are being made.

Mr. Clark: Does the Minister acknowledge the very grave and widespread public disquiet on this topic? Will he assure the House that in framing his measures he will not allow himself to be deflected by legal advice on the difficulty of definition? Does he not further agree that a picture of a child under the age of consent indulging in sexual activities with an adult is prima facie evidence of a breach of the law?

Mr. John: Of course, I view this problem with the utmost seriousness. As for ignoring legal advice about difficulties in legislation, I suggest that none of us ought to avoid considering such difficulties, because we have to enact the legislation and the courts have to give effect to it. If there are difficulties of definition, they must be tackled seriously. I am having discussions with, among others, the hon. Gentlemen's hon. Friend the Member for Bexleyheath (Mr. Townsend), who has a Private Member's Bill on this subject, and I am trying to be as co-operative with him as I can.

Mr. Whitehead: Can my hon. Friend say how many police prosecutions there have been of people involved in photography or filming concerning this disgusting exploitation of children? Have they been commensurate with the apparent growth of the practice?

Mr. John: So far as we can ascertain—we have checked with the police on this subject—the availability of such literature has not markedly increased. The difficulty that I find in answering my hon. Friend's question is that implicit in many of these matters is not the direct offence itself but other sexual offences which arise out of the inclination of the people who take the photographs.

Mr. Townsend: I welcome the Minister's comments. However, why do not the Government take instant action to try to cut down on the distribution of such material?

Mr. John: Because I do not think that in the criminal law we should rush without due consideration into what are admitted on all hands to be difficult matters.


We are considering them. The hon. Gentleman and I had a useful discussion about these problems, and he will acknowledge that there are difficulties.

Illegal Immigrants

Mr. Budgen: asked the Secretary of State for the Home Department how many people he estimates are eligible to apply for the amnesty for illegal immigrants announced on 29th November 1977.

Dr. Summerskill: I refer the hon. Member to the reply that my right hon. Friend gave to a Question by the hon. Member for Louth (Mr. Brotherton) on 9th December.

Mr. Budgen: Does the Minister agree that these amnesties encourage immigrants to believe that so long as they can enter this country by one means or another they are likely to be able to remain here eventually, openly and legally?

Dr. Summerskill: This is a completely ignorant question based, presumably, on ignorance of the facts. This extension of the amnesty was introduced for people who had entered by deception, as opposed to illegally, before January 1973. It does not apply to anybody else. The Immigration Act 1971, introduced by the Conservative Party, put people in jeopardy retrospectively. I am sure that nobody in the House would approve of retrospective powers in such legislation. All amnesty for everybody will finish at the end of next year, on 31st December. After that, no amnesty will apply at all.

Mr. Bidwell: Does my hon. Friend agree that the amnesty has been magnified out of all proportion to the numbers that it can possibly affect, and simply seeks to put right what was expected to be put right way back in 1973 by her right hon. Friend's predecessor? Does she agree also that the villains of the piece, to a great extent, have been employers, especially in the Midlands, who support the hon. Member who brings this matter before us?

Dr. Summerskill: My hon. Friend's question is an informed question, based on knowledge of the facts. This decision was made as a result of recent court judgments, and that is why my right hon.

Friend has been honourable in carrying it out.

Mr. Whitelaw: Does the hon. Lady appreciate that her reply to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) is extremely unreasonable, in that he asked a perfectly sensible and proper question? Does she appreciate that there is a very narrow line—which, apparently, she draws but few others do—between deception and illegal entry, which many people find difficult to understand? If it be deception or illegal entry, will she not be the first to agree that an amnesty of this sort inevitably encourages the belief by people that if, in the future, they can get into this country by any means, they will be allowed to stay? That is very damaging indeed to those who have come in legally and who will have much resentment stirred up against them by this action.

Dr. Summerskill: I do not think that the right hon. Gentleman lends weight to his argument by decibels. This measure follows court judgments, and I am sure that the whole House would wish to put right the irregularities of the Opposition's own Act. No new distinction is being drawn between the illegal immigrant who came in by deception and the illegal immigrant who came in clandestinely. That is the whole point of this measure. The amnesty provision will apply to both those groups until the end of next year.

Mr. Speaker: I shall allow three minutes after half-past three for Prime Minister's Questions.

CBI

Mr. Michael Latham: asked the Prime Minister when he last met the CBI.

The Prime Minister (Mr. James Callaghan): I refer the hon. Member to the reply which I gave to my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) on 10th November.

Mr. Latham: Is it not an interesting example of the social contract and "Back to Work with Labour" that the Secretary of State for Transport has apparently been urging a CBI member, the Road Haulage Association, to set up a defence fund to resist a possible strike by Jack Jones's union? Is that the Labour Party's new industrial relations policy?

The Prime Minister: When I last met the CBI and talked to the President, he made quite clear that the CBI believes that everything depends upon beating inflation. That is what the actions of my right hon. Friend are directed to.

Mr. Grocott: Will my right hon. Friend take the opportunity today to discuss with anyone interested in industrial relations the persistent evidence of this century that the higher echelons of the judiciary are anti-Labour and antiunion? Does he agree that until the judiciary comes less from a privileged and wealthy elite and becomes more representative of the public that prejudice will continue?

The Prime Minister: I did not discuss that matter with the CBI and have no intention of doing so. It does not arise out of the Question. If there is any comment to be made about the judiciary, the normal course is to put it on the Order Paper. That is the procedure which I should recommend in such cases. But I also recommend to the House that we should beware of trying to embroil the judiciary in our affairs, with the corresponding caveat that the judiciary should be very careful about embroiling itself in the Legislature.

Mrs. Thatcher: May I refer back to the Prime Minister's answer to my hon. Friend the Member for Melton (Mr. Latham)? Is he really saying that it is the Government's new policy to encourage solidarity among employers, as a means of fighting off wage claims by trade unions?

The. Prime Minister: I encourage solidarity among everybody in the country, because I believe that national effort and common understanding are the best ways in which we can ensure that the scourge of inflation does not return. I wish that the right hon. Lady, now and again, would show a little more understanding.

Mrs. Thatcher: So the answer to my question is "Yes".

WELLING, KENT

Mr. Townsend: asked the Prime Minister if he has any plans to visit Welling, Kent.

The Prime Minister: I have at present no plans to do so.

Mr. Townsend: Is the Prime Minister aware that yesterday one of his Ministers decided to close down the last two remaining hospitals in my constituency? Why are so many so-called cottage hospitals, many of which are highly efficient and well modernised, being closed down at a time when Ministers are calling for more community care?

The Prime Minister: With respect to the hon. Gentleman, I think that it would be preferable if he would table a question of that sort to the Secretary of State for Social Services. There is a well-known policy for building district hospitals. It has been discussed and debated in the House many times. If the hon. Gentleman wishes to raise a particular matter I suggest that he table a Question to my right hon. Friend.

Mr. Faulds: If my right hon. Friend gets on the wrong train when he does not intend to go to Welling and by some fortunate mischance lands up in Smethwick, will he make a speech there roundly condemning the racialist nonsense and the Nazi nature of the National Front? I can assure him of a very sympathetic hearing from the moderate and tolerant people of the West Midlands.

The Prime Minister: My hon. Friend has always been in the forefront in condemnation of this sort. I reiterate how pleased I am that the broadcast undertaken on behalf of the Labour Party last week has aroused such public interest, and, I am glad to say, some controversy, too, because it is as well that our attitudes should be clearly out in the open and that we should understand where we are. All my hon. Friends and I stand against racialism of any description at any time and in any place.

Mr. Fairbairn: When the Prime Minister is on his way to Welling, by whatever means, or to Smethwick, will he take time to read the rather seedy newsletter of the Scottish National Party, called "Focus", in which the views of our Ambassador in Washington, whom he may know, and who is what I belies is called an economist, are prayed in aid of the Scottish National Party? It says that Scotland should have an independent


monetary system and an independent exchange as the foundation stone of the benefits that Scotland is about to enjoy. Does the Prime Minister agree with those views, and does he think it right that the Ambassador in Washington should air them, or does he think that the Scottish National Party is taking advantage of this poor, underprivileged youth?

The Prime Minister: I am sure that the Ambassador in Washington is capable of looking after himself against the hon. and learned Gentleman at any time. As for the general sentiments expressed by the hon. and learned Gentleman, for once I find myself in agreement with him.

PRIME MINISTER (ENGAGEMENTS)

Mr. Wyn Roberts: asked the Prime Minister if he will list his engagements for 15th December.

The Prime Minister: This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I shall be holding further meetings with ministerial colleagues and others.

Mr. Roberts: Can the Prime Minister confirm today's Press report that the Government already have the Frolik tapes, which the Lord President seemed to know so little about last night? Secondly, does he agree that it would be right and fair to have an independent inquiry, so that those named can have an opportunity of clearing themselves?

The Prime Minister: As is well known in the House, there is no ministerial responsibility for Press reports and Ministers are not required to answer for them. I was extremely surprised by the allegations made in the House yesterday. The hon. Member for Mid-Bedfordshire (Mr. Hastings) said that he had been considering the matter for months. It is a well-known convention in this House—and it is usually accepted, although not by one or two hon. Members—that hon. Members do not raise these matters across the Floor of the House unless there has been previous discussion. I can tell the House that the hon. Gentleman at no time made any approach to me on this matter.
The general allegations have, of course, been floating around since January 1974

—nearly four years ago. They have been investigated in the past. I have no comment to make on the allegations, except to say that I think it disgraceful that members of the public should be put at risk in this way by such allegations, made without any reliable support.

Mr. Heffer: Has my right hon. Friend had the opportunity to read Mr. Andrew Alexander's column in the Daily Mail today, which, quite rightly, says that the speech by the hon. Member for Mid-Bedfordshire (Mr. Hastings) was very silly? I think that that is the context in which it ought to be left.

The Prime Minister: Perhaps it was a silly speech, but it was calculated to do a lot of damage, and deliberately to do damage. Otherwise, if it had been intended to be raised to protect national security, I believe that the hon. Member would have come to me privately, expressed his views and asked me to investigate the matter. The matter could then have been cleared up. In fact, of course, these matters were looked into years ago—two or three years ago. What has been happening recently is that Mr. Frolik has been embroidering the original stories that he told when he was debriefed some years ago. It is a way of keeping himself in the public eye, and from time to time he manages to get some Press interest and to catch one or two Conservative Members.

Mr. Hastings: Will the Prime Minister accept that I make no apology whatsoever for raising this matter? Does he agree that the only way to restore public confidence is to set up an independent inquiry, as asked for by my hon. Friend the Member for Conway (Mr. Roberts), whose supplementary question he has not answered? Will the right hon. Gentleman accept that I shall make all material in my hands available to such an inquiry?

The Prime Minister: Knowing him, I would not expect the hon. Gentleman to make an apology. But what I do say is that if he has any information, as he now says he has, he should have done the proper thing and communicated it to me instead of making allegations across the Floor of the House in the way that he did, skulking behind parliamentary privilege to attack people outside.

EUROPEAN COMMUNITY (SUMMIT)

Mr. Corbett: asked the Prime Minister if he will make a statement on the European Summit meeting.

The Prime Minister: I refer my hon. Friend to the statement that I made on 7th December.

Mr. Corbett: Can my right hon. Friend say something more about the steps to be taken soon in an attempt to cut down the appallingly high levels of unemployment in all of the Community countries, especially among young people? Would he also elaborate on what he said in his reference to something more having to be done in the public employment sector? When may a start be made on that?

The Prime Minister: It so happens that the Secretary of State for Employment is in Paris today meeting his Community colleagues, who are also Ministers of labour and employment, to discuss this very question of youth unemployment. I am very glad indeed to be able to say that between September and November youth unemployment in this country fell by nearly 100,000. In September, it was 166,000. In November it was 68,000. As for public employment, I have nothing that I can add at this stage to what I said two or three days ago.

Mr. Tebbit: During the Summit meeting did the Prime Minister manage to discover from the French President why, since February 1974, prices have risen twice as much in Great Britain as they have in France, and why unemployment has risen much more than in France? When speaking to the President, did the Prime Minister take any pride in the fact that Britain is at the top, or the bottom, according to which way one looks at it, of the league—in other words, worse on prices and worse on unemployment than any other member of the Community?

The Prime Minister: I did not discuss 1974 with the President because the reason is well known—that the Conservative Administration allowed the money supply to get totally out of control. Whereas when we came into office the M3 figure—which is the index frequently used—was over 27 per cent., as the hon. Gentleman may have seen from statistics which were

published at 2.30 p.m. today, it is now down to 13·4 per cent. and will keep within the 9 per cent. to 13 per cent. level. Therefore, we do not have far to seek for the reasons for inflation. The hon. Gentleman, unusually, is getting a little behind the times, because the level of inflation in this country next year is likely to be as good as that of France and may well be better.

Mr. Spearing: Did my right hon. Friend discuss with his colleagues at the Summit the new powers of the European Assembly exercised under Articles 203 and 204 of the Treaty of Rome? Has he seen the reports of the success of the Assembly in screwing more money out of the Council of Ministers in Strasbourg this week? Does not this exercise of the Assembly's powers show that there is already a federal element in it and, therefore, that direct elections would bring us into a federal structure, which my right hon. Friend denies exists?

The Prime Minister: I do not think that this long-running debate to which my hon. Friend is obsessively attached will ever be settled by question and answer in the House of Commons. My general conclusion, in answer to his supplementary question, is to say "No, Sir."

Mr. Peter Walker: Is the Prime Minister aware that while youth unemployment as a whole, under this Government, has doubled, the unemployment of young West Indians has increased sixfold? When is he going to do something to tackle that problem?

The Prime Minister: The right hon. Gentleman is right to focus public attention on these matters, which are of great concern and to which we should all direct our attention. The West Indians concerned are mostly in areas in which it is more difficult to get jobs, and the Secretary of State for Employment has been making special inquiries and seeking to undertake special action. I thank the right hon. Gentleman for the attention that he directs to this problem.

Mr. Fernyhough: Reverting to the supplementary question by the hon. Member for Chingford (Mr. Tebbit), can my right hon. Friend explain why, if what the hon. Gentleman says is true—that French prices are so much lower than ours—boatloads of French people come to this


country every weekend to buy goods and stores?

The Prime Minister: It was certainly true during the past 12 months, but I have a feeling that it will not be true next year, because the level of inflation in this country is likely to be level with that of France, give or take a point or two.

HONOURABLE MEMBERS (PENSIONS)

Mr. English (by Private Notice): asked Mr. Speaker whether he will arrange for Members of the House to receive independent actuarial advice upon his letter of 30th November relating to contracting Members out of the new State pension scheme?

Mr. Speaker: The Managing Trustees of the Parliamentary Contributory Pension Fund who were appointed by this House to administer the Members' Pension Fund have examined the merits, or otherwise, of contracting out of the additional pension element of the new State scheme in accordance with the provisions of the Social Security Pensions Act 1975 and are satisfied that by so doing it is in the best interests of Members. If the hon. Member wishes to pursue this matter, I draw his attention to paragraph 7 of the notice which accompanied my letter which states how representations can be made either to the Managing Trustees or to the Occupational Pensions Board.

Mr. English: I am not sure, Mr. Speaker, whether you are to be congratulated upon joining the ranks of employers. I always thought, until now, that my employers were my constituents. The point at issue is whether we have the same rights as employees. We have given employees rights of consultation so that they can get independent advice to determine whether it is worth their while to be contracted out or contracted in, and we need such independent advice ourselves from an actuary before we can make the same decision.

Mr. Speaker: I can only advise the hon. Member to take this up with the managing trustees, who are all senior Members of the House.

BUSINESS OF THE HOUSE

Mrs. Thatcher: May I ask the Leader of the House to state the business for the week when we return from the recess?

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): The business for the first week after the Adjournment will be as follows:
MONDAY 9TH JANUARY—Supply [3rd Allotted Day]: debate on a motion to take note of the First to Tenth Reports from the Select Committee on Public Accounts in Session 1976–77, and the related Treasury and Northern Ireland memoranda.
Motion on the Parochial Registers and Records (Church of England) Measure.
TUESDAY 10TH JANUARY and WEDNESDAY 11TH JANUARY—Further progress in Committee on the Scotland Bill.
THURSDAY 12TH JANUARY—Progress in Committee on the European Assembly Elections Bill.
FRIDAY 13TH JANUARY—Private Members' motions.

Mrs. Thatcher: Can the Lord President give some indication how he proposes to deal in the future with the European Assembly Elections Bill? He was kind enough in the past to indicate that he intended to take about two days a week on the Scotland Bill. What are his plans for dealing with the European Assembly Elections Bill?

Mr. Foot: I think that we should first see how we proceed on Thursday 12th January. We can make up our minds after that.

Mr. Raphael Tuck: My right hon. Friend will be aware that, following an unsuccessful attempt by me two days ago to raise the matter of the Town and Country Planning General Development (Amendment) Order in the House and a subsequent meeting of a number of us with the Minister for Housing and Construction, it was announced last night that that order has now been withdrawn subject to further consideration. Will my right hon. Friend give an assurance that that further consideration will include


time for debate in the House and that he will not try to bulldoze the whole thing through the House without adequate debate, which he appeared to be doing until the announcement last night?

Mr. Foot: There was no question of any bulldozing at all. What happened was that representations were made to me in the House—from both sides of the House, by my hon. Friend and by others—and representations were made in other meetings. My right hon. Friend the Secretary of State for the Environment responded to those requests, and that is the reason for the withdrawal of the order. Of course, he will now have further discussions with right hon. and hon. Members on this side—and perhaps with others—and with local authorities. We shall see how we shall proceed then. Far from it being a matter of bulldozing, it has been a matter of responding to the wicheii of the House.

Mr. Powell: The right hon. Gentleman is aware that, following the decision of the Committee on Tuesday night, the Government have accepted that it will be necessary for them to bring forward amendments to the European Assembly Elections Bill. These will, no doubt, be amendments which the Government have had a long opportunity to consider. As they may be relevant to amendments and debates on the next day in Committee, could the right hon. Gentleman assure the House that those amendments will be tabled, if possible, before the House rises or at the latest on the first day after we return?

Mr. Foot: I certainly hope that we could accord with the second suggestion made by the right hon. Gentleman, if not with the first. If he is referring to the new clause which was promised, that is one aspect of the matter, and I should hope that that at any rate would be down by the first day when we return. I shall certainly look into the further question that the right hon. Gentleman has raised to see whether we can either get the amendments down before the House rises, or at any rate on the first day when we return.

Mr. Hooley: When cha11 we have an opportunity to discuss foreign policy, including the proposals in the Berrill Report?

Mr. Foot: We do not have proposals for such a debate at the moment. This is a matter that can be raised by others in the House, but I do not have any proposition for such a debate in the immediate future.

Mr. Carlisle: As one of the members of the Franks Committee which reported on the question of immigration as long ago as October of last year, and as we were told when that committee was set up by Mr. Jenkins that the purpose was for a report as a basis for debate, may I ask when it is proposed to have the debate on Franks Committee Report?

Mr. Foot: There are various other ways in which general debates of these matters can be introduced. Indeed, one of the arrangements of the House gives the Opposition the opportunity to make the choice of subject. That does not mean that the debate could not take place on another occasion, but I have no suggestion at the moment, I fear for an immediate debate on the subject.

Mr. Henderson: Is the Leader of the House aware that there will be considerable disappointment that he has not yet found it possible to give Government time to discuss the condition of the steel industry? Is he aware that the executives of the British Steel Corporation refuse to give the necessary information to the Select Committee? May we have an opportunity of a debate before the redundancies take place so that, if possible, we may be able to influence the situation?

Mr. Foot: Obviously, the matter is of the highest importance both for hon. Members who represent steel constituencies and for the country as a whole. It will have to be debated in some form in the House of Commons. I do not accept for a moment that any discussion at a Select Committee would be a substitute for a debate in the House, but the exact time when it is best for the debate to take place is another question. The Government have said that a statement will be made when we return after the recess, and we shall have to see on the basis of that statement when a debate could take place.

Mr. Hugh Jenkins: My right hon. Friend will have heard the Prime Minister deal pretty comprehensively with the hon.


Member for Mid-Bedfordshire (Mr. Hastings). This may be why in his plans for next week he has not provided for any further discussion of the matter raised by the hon. Member. But since my right hon. Friend was here himself and heard the allegations, has he anything further to add on the matters raised by the hon. Member yesterday?

Mr. Foot: I did not comment fully on what was said by the hon. Gentleman yesterday, because I was out of the Chamber for a period during his speech. Although I was given a note of it, I did not think that I could comment immediately. Having now read the speech, I believe that a much more extensive comment could and should have been made, but I believe that the overwhelming majority of hon. Members will agree with the contempt which the Prime Minister has expressed on the matter and the manner in which it was introduced by the hon. Gentleman.

Sir D. Walker-Smith: On the last question put to him, is the right hon. Gentleman aware that the point is that there should be an investigation by the most appropriate method of allegations of this sort? Will he kindly take that under consideration? Second, I wanted to ask, in regard to the Town and Country Planning General Development (Amendment) Order, whether the right hon. Gentleman appreciates that neither yesterday in the House—this is col. 498 of Hansard—nor in response to the hon. Member for Watford (Mr. Tuck) did he state that, if the order is brought forward again, there will be time to debate it.

Mr. Foot: On the first question, if the hon. Member for Mid-Bedfordshire (Mr. Hastings) had been concerned about a serious discussion rather than spreading a smear, he would not have introduced the matter in the way he did. On the second question, of course, I believe that, in view of the general public interest aroused on this subject, there will have to be a debate. I assume that it would take place on the same kind of basis that we were proposing for a debate to take place on the original order. In view of the general interest, I believe that there would have to be a debate in the House, as well as the representations from other quarters.

Rear-Admiral Morgan-Giles: On a point of order, Mr. Speaker. Is it not a fact that at business questions the Leader of the House is acting as Leader of the House and representing the interests of hon. Members on both sides? Is it, therefore, right and in accordance with the practice of the House that he should impute wrong motives to my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) in the speech he made yesterday?

Mr. Speaker: I think that there is no comment I can pass there other than to say that I have heard it done many a time since I have been here.

Mr. Heffer: Further to that point of order, Mr. Speaker. Are you aware that the hon. Gentleman has been invited to go on a television programme to discuss the matter tonight with me and refused—

Mr. Speaker: Order. Both sides are pursuing this. We are not advancing the interests of the House in pursuing the matter in this way. I must warn the House that I have over 40 names of hon. Members who have indicated that they hope to catch my eye in the debate on the rate support grant, and I hope that that will be borne in mind now.

Mr. Loyden: May I ask my hon. Friend, once again, whether he will arrange, early in the New Year, a full-scale debate on the question of unemployment? Is he aware that many of my hon. Friends are of the opinion that present legislation going through the House is less important than a debate on unemployment?

Mr. Foot: I fully accept what my hon. Friend says about the paramount importance of continuing debate and discussion in the House and with Ministers on the major subject of unemployment, and I am not at all surprised that he raises the matter so constantly in the House. Because special debates are not arranged on the subject does not mean that the Government do not attach the highest importance to it.
As my hon. Friend knows, because he participates in them, representations are all the time being made by him and other hon. Members whose areas are worst hit. But we must look in the New


Year to having general debates on the subject in the House.

Mr. Onslow: Does the Leader of the House recollect that the matter arising out of the Frolik statement yesterday was a conflict of evidence between the Czech defector and the previous Prime Minister whether John Stonehouse was a Czech spy? Does the right hon. Gentleman not think that that is a matter which ought to be cleared up? Will he not undertake that there will be a statement and an inquiry by the Security Commission into all matters concerned with that issue?

Mr. Foot: If Conservative hon. Members were serious in wishing to have an inquiry into these matters, they would not have chosen the method of raising them which they did choose.

Mr. Skinner: As there seems to be a swarm of requests from the Opposition for investigations and inquiries concerning a book which is having difficulty selling, would my right hon. Friend consider—as there is to be no inquiry into that matter—whether we may have an inquiry into another book that is selling, namely, the book by Charles Raw about Slater Walker? That would reveal a few things about hon. Members opposite.

Mr. Foot: I hope that, in his eagerness to discuss the second book, my hon. Friend will not give too much advertisement to the first.

Mr. Pym: Does not the Leader of the House think that he is protesting too much about the matter that was raised yesterday? Is he not aware that yesterday I suggested that he was rather sensitive on the issue, and he is giving every indication today that he is? I do not think it right that he should impugn the honour and the intentions of hon. Members. Will he now answer the point raised by my hon. Friend the Member for Woking (Mr. Onslow)—a real point and a new one—which was relative to the previous Prime Minister, the right hon. Member for Huyton (Sir H. Wilson)?

Mr. Foot: I am surprised that the right hon. Gentleman should give his shield or cover to his hon. Friends in this matter. Perhaps he would consider whether raising matters of this kind on an Adjourn-

ment is the proper way, particularly when the names of individual citizens will be mentioned. Surely, if that is to be done, an opportunity might be given whereby those involved would be able to reply immediately. I suggest that the right hon. Gentleman should consider the fair play involved and sort out that question before he questions me on the matter.

Mr. Cormack: I thank the right hon. Gentleman for his response to the representations on the Town and Country General Development (Amendment) Order. May I ask him to spend some of the recess reflecting on Early-Day Motion No. 131, which draws attention to the abuse of the guillotine on the Scotland Bill? Will he use his best endeavours to ensure that, when we return, every relevant and important clause of that Bill receives proper debate? It is a constitutional absurdity that a Bill of suoh magnitude should go through without some of its most important clauses being even discussed in the House.

[That this House strongly deplores the result of the use of the guillotine on the Scotland Bill whereby 22 of the 38 clauses of the Bill so far considered have been forced through without any opportunity for debate or amendment; notes that these include many clauses of serious constitutional importance; and insists that the Government enable Parliament to do its duty by providing sufficient time for the consideration of each of the remaining clauses of the Bill.]

Mr. Foot: I understand the importance of the matter raised by the hon. Gentleman. The matter was discussed by the House when it set up the Business Committee, has been discussed by the Business Committee, and may be discussed by that Committee again. There are always difficulties with a guillotine, but the House decided that if the Bill was to go through—and the House wanted the Bill to go through—it was necessary to have a guillotine.

Several hon. Members: rose—

Mr. Speaker: I shall call three more hon. Members.

Mr. Forman: As one of the matters of great interest and uncertainty to members of the public outside the House is the future of the Lib-Lab pact, does the Leader of the House feel that a suitable


subject for debate during the first few weeks after the recess might be the proposition in The Times this morning to the effect that the Liberal Party is no longer the people's watchdog but rather the Prime Minister's poodle?

Mr. Foot: I think that The Times usually does a bit better than that. At least it is usually able to manufacture its own jokes. Moreover, I should not accept The Times as an authority on the Liberal Party or on any of these arrangements. Indeed, The Times is probably as irritated as is, say, the Sun, although not always expressing itself so ably, and other newspapers, such as the Daily Express, that arrangements conveniently made in the House are ensuring that the good government of the country is carried on.

Mr. Thompson: As forestry is of great importance to Scotland as a major form of land use, are we never to have a debate on the Floor of the House on forestry? Must we wait until there is a Scottish Assembly, to debate it there?

Mr. Foot: This does not apply only to the hon. Gentleman. I think that it is wrong for hon. Members to give the impression to people outside that there are not plenty of opportunities for Back Benchers to raise a whole range of such questions. Any hon. Member who, over a few weeks, is not able to raise this kind of matter is not making the fullest use of the facilities of the House of Commons. It does no good to the House of Commons to suggest that suppression of debate is occurring because debates are not always taking place on Government motions or Government proposals. Back Benchers have access to a great part of parliamentary time.

Mr. Shersby: Will the right hon. Gentleman try to find time early in the New Year for a debate on mental health? It is some time since we debated this matter, and when we last debated it there was an expression of opinion that further time would be found as soon as convenient.

Mr. Foot: I agree with the hon. Gentleman about the importance of the subject and the importance of having debates on it, but once again I must say that there are opportunities for others, apart from the Government, to initiate debates in the House.

Mr. Hastings: On a point of order, Mr. Speaker. As I heard him, the Leader of the House impugned my honour during a statement a short time ago. Am I not to be given the right of reply?

Mr. Speaker: I heard nothing to impugn the hon. Gentleman's honour, or I should have intervened. The disagreement about whether the hon. Gentleman should have raised what he did is entirely different from saying that he is a dishonourable man. As the matter has had a very good airing I think that it is in the best interests of the House to leave it where it is.

PAPUA NEW GUINEA (GIFT OF A CLOCK)

The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): I beg to move,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a clock for the Clerk's table to the National Parliament of Papua New Guinea and assuring Her Majesty that this House will make good the expenses attending the same.
The gift to the national Parliament of Papua New Guinea follows an established and excellent tradition that we send gifts from this House of Commons to other legislatures within the Commonwealth. On 29th July 1975, in reply to a Question from my hon. Friend the Member for Rother Valley (Mr. Hardy) about independence gifts to Papua New Guinea, the then Prime Minister said that Her Majesty's Government would propose that the House of Commons should offer a parliamentary gift to the Legislature of Papua New Guinea. It is that undertaking that we are now pleased to honour.
The Speaker of the Papua New Guinea House was, of course, consulted about the form of the gift and welcomed a proposal to present a clock for the Clerk's table. The clock has now been manufactured and is on display in the Upper Waiting Hall of the House where it will be available for hon. Members to inspect until 16th December. If the House accepts the motion, as I am sure it will, arrangements will, I hope, be made by you, Mr. Speaker, to send a small delegation from the House to present the gift next year.
I therefore commend the motion to the House in the expectation that it will be accepted as an expression of friendship and good will towards the Parliament of this sister Commonwealth country. I trust that I shall be speaking for the whole House in expressing our good wishes in the future to the national Parliament of Papua New Guinea.

Mrs. Thatcher: I welcome what the Leader of the House has said, and the decision to send a gift of a clock to Papua New Guinea. We do not know quite as much about these people as we normally know about new States of the Commonwealth, because until recently Papua New Guinea has been under the protective wing of Australia.
We think that the clock itself is a symbolic gift. The Papua New Guineans are a people who value the culture and traditions of the past, and until two generations or so ago they were living in exactly the same way as their ancestors had lived for many years, unaware of the technical changes about them. Perhaps the clock will remind them of that time past.
The clock will also, on the table of the new Parliament, remind the Papuans of the challenges and responsibilities of the present, and therefore the great tasks that lie before them. With this gift we wish them a very bright, prosperous and confident future.

Mr. Freud: May I add my own party's expression of appreciation and approval of this gift? I wonder whether the Lord President would advise the House of the size of the delegation that will present this gift; and, in view of the close spiritual communion between the Isle of Ely and Papua New Guinea, might he perhaps consider representation by someone from that area of North Cambridge-

shire which I have the privilege to represent?

Mr. Mellish: I am sure that we should welcome such a visit. Speaking as one who has never been to Papua, I should like to go to explain to them what the Lib-Lab pact is all about.

Mr. Fairbairn: When my right hon. Friend the Member for Finchley (Mrs. Thatcher) said that this was a symbolic gift and demonstrated technical changes, I wonder whether she knew how wisely her words were chosen. The clock is a very symbolic gift because its works were made in Japan. Is it not possible for the Government and the House of Commons to find a British firm to do this work, or is the job creation scheme a "job creation in Tokyo scheme"?

Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a clock for the Clerk's table to the National Parliament of Papua New Guinea and assuring Her Majesty that this House will make good the expenses attending the same.

Address to be presented to Her Majesty by such Members of this House as are of Her Majesty's most Honourable Privy Council or of Her Majesty's Household.

ROYAL ASSENT

Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Consolidated Fund Act 1977
2. Finance (Income Tax Reliefs, Act 1977
3. Atholl Investments (Aberdeen Development) Order Confirmation Act 1977

RATE SUPPORT GRANT ORDER

3.59 p.m.

The Secretary of State for the Environment (Mr. Peter Shore): I beg to move,
That the Rate Support Grant Order 1977, a copy of which was laid before this House on 30th November, be approved.

Mr. Speaker: The House heard me say earlier that more than 40 right hon. and hon. Members had indicated that they hoped to be called. I shall take it in the spirit of Christmas if no one comes to the Chair to ask me to be called. The matter is exceedingly difficult. What I have tried to do is to work it out on a geographical basis to see that we cover, as best we, can, the whole of the country.
I understand that we shall take the four orders together. I have not selected the amendment to the Scottish motion.

Mr. Shore: As you have said, Mr. Speaker, we are to discuss at the same time the three other motions:
That the Rate Support Grant (Increase) Order 1977, a copy of which was laid before this House on 30th November, be approved.
That the Rate Support Grant (Increase) (No. 2) Order 1977, a copy of which was laid before this House on 30th November, be approved.
That the Rate Support Grant (Scotland) Order 1977, a copy of which was laid before this House on 1st December, be approved.
I understand, Mr. Speaker, that my right hon. Friend the Secretary of State for Scotland hopes to catch your eye during the debate in order to deal with the Scottish order.
Before I deal with the specific subject matter of these orders the House may find it useful if I make a brief survey of local government expenditure in the light of our present economic situation, compared with that which existed a year ago.
There are two major differences; first, the economic situation has been greatly improved—inflation has eased, the balance of payments is now in surplus and unemployment, although very high, is no longer increasing; secondly, local authority expenditure is demonstrably under control. Excessive growth in local authority expenditure, which has been a serious burden in recent years, has been halted. We therefore do not need to take any preventive action against it, and local authority expenditure is well on target.
So I approach this settlement quite differently from last year's. Then, I was seeking for cuts in expenditure; now I am not. Then, I was reducing the grant; now I am not. Then, I was contemplating reductions in manpower; now I am not.

Dr. Oonagh McDonald: With reference to cash limits on local authority expenditure, can my right hon. Friend say what level of rise in earnings is presupposed for 1978–79?

Mr. Shore: "Within the Government's guidelines" has been our estimate for the increase in earnings. My hon. Friend has, I think, been a little early in her intervention, because I mean to say something about this and other matters as I proceed.
I now turn to the orders. The main order relates to the RSG settlement for 1978–79. The increase orders relate to 1976–77 and 1977–78 respectively. I shall deal first with the increase orders.
The first of the increase orders is essentially a tidying-up exercise in respect of the 1976–77 settlement. The 1976–77 settlement was originally determined at November 1975 prices and updated last year to take account of changes in costs since then. The House will recall that the additional grant then made available was cash limited, and further abated by £50 million. I said then that local authorities should plan on the basis that a second increase order would not be made unless necessary to deal with the variable items. Accordingly, to take account of those variables, the additional grant being made available through this increase order is £9 million. I have, of course, taken full account of the consequences of this decision for local authorities' finances in formulating my proposals for the 1978–79 settlement.
I turn now to 1977–78. The settlement for this year, approved by the House last December, was, of course, at November 1976 prices. Grant at 61 per cent. on the agreed increases in local authority costs would not exhaust the cash limit. The Government accordingly propose a first increase order of £337 million. The cash limit has been adjusted to take account of changes in the variable items and to take account of the decision fully to reimburse authorities for the extra


costs they will incur as a result of the extension of the free school meals scheme.
I turn now to the main Rate Support Grant Order, which is the meat of today's debate and which deals with the forthcoming financial year 1978–79.
Though the need for restraint has not disappeared, overall cuts in services should not be necessary in 1978–79. This is partly a reflection of the improvement in the economy, but the other factor which has made my task this year much less difficult is the way in which local authorities have continued to co-operate with us in keeping their expenditure to planned limits.
The settlement every year involves a number of factors. There is the level of current expenditure, for instance, for which local authorities should plan, and the extent to which this expenditure should be financed by the taxpayer or the ratepayer; there is also the requirement that grant be distributed with proper regard to the expenditure needs of areas and the ways in which those needs may be changing. In treading a path between the force of all these different and sometimes conflicting considerations—and it is not easy—and in attempting to strike a balance between them, judgment as well as arithmetic is involved. This year I thought it right to aim for a greater degree of stability than we have been able to enjoy during the past few years.
The first aspect is expenditure. I am proposing a level of relevant expenditure of £12,531 million, which is, of course, in accordance with the Government's expenditure plans, which have themselves undergone some modification in recent months. Expenditure on free school meals has been increased, extra provision has been made for the urban programme, and there have been further increases in current expenditure for education, personal social services and Home Office services, as announced by the Chancellor on 26th October. On the same day he announced the £400 million construction package, the revenue effects of which have also been taken into account in calculating relevant expenditure. The significance of all these changes is that the planned level of local authority current expenditure will be broadly the same in 1978–79 as in 1977–78. This is not, of course, to say that it will be easy

for every local authority to meet the target figure—far from it. We are well aware of the difficulties with individual services which local authorities have experienced and will continue to experience. But it is at least a welcome change from the cuts which were foreshadowed last year.
Manpower is, of course, closely affected by expenditure.

Mr. Michael Marshall: When the Secretary of State speaks of the difficulties of particular authorities. I know he recognises that in the case of West Sussex his 2p safety net is a 3p loss. Will he confirm to the House that his hon. Friend the Under-Secretary, when we go to meet him next year will look again with some degree of flexibility at the way in which the rate support grant works in the worst-affected authorities?

Mr. Shore: I am coming to the question of distribution, but I think that the hon. Gentleman will allow that we have at least on this occasion, tried hard to meet the excessive impositions that the rate support grant inflicts from year to year on individual authorities. That is a matter that we will come to in the later part of my speech.
As I have said, manpower is closely affected by expenditure. Last year, because we had to cut expenditure, we had to advise local authorities that some reduction of manpower would be necessary I said then that with few exceptions any such reduction could be met by natural wastage. All the evidence I have is that my expectation then has been fulfilled This year, because we are not seeking cuts in expenditure, we no longer need to seek cuts in manpower. Although obviously individual authorities may reduce staff in particular areas and in pal titular services, I see no reason overall why there should be cuts in local authority manpower because of the expenditure proposals in the settlement.
The figures for relevant expenditure which we accept for the purposes of making the RSG settlement are discussed every year in the Consultative Council for Local Government Finance. All our discussions have been conducted in a most constructive and friendly way and I should like to take this opportunity to


express thanks to all those who have taken part.
I turn to the grant percentage. In arriving at 61 per cent.—the same figure as for last year—I had in mind, above all, as I have indicated, the need to give greater stability to local authorities' finances, particularly after two years of change—indeed, of reduction. I was also very conscious of the need to keep rate rises down as far as possible. I was therefore doubly keen on retaining the figure of 61 per cent. because this, by our calculation, would allow local authorities taken together to propose average rate increases within single figures. This would accord with our counter-inflation policy and would give local authorities flexibility in dealing with their finances.
As in previous years, there will be a cash limit on the amounts that may be paid in due course by way of grant in increase orders in respect of pay and price increases after November 1977. This limit has been set at £525 million. It is based on estimated increases in a range of costs corresponding to increases in grant at 61 per cent. of £320 million to £573 million.
The assumptions made are wholly compatible with the Government's pay and anti-inflation policies. Excluding the exceptional reduction in national insurance contributions, the cash limit corresponds to an increase between 1977–78 and 1978–79 in the underlying costs affecting local authority current expenditure of just under 9 per cent. Estimated increases in specific grant—which are not subject to a cash limit—account for £54 million of the £525 million that I mentioned, leaving a cash limit of £471 millions on the rate support grant and supplementary grant.

Mr. Michael Alison: The Secretary of State must be expecting wages and salaries to rise more this year, now that we have moved out of phase 2, with its strict 4 per cent. limit. Why is it, therefore, that the right hon. Gentleman is having a cash limit less this year than last year?

Mr. Shore: I am talking about the year 1978–79. As the hon. Gentleman will recall, we are in phase 3 now and, as I say, it is perfectly consistent with the maintenance of the Government's guidelines on pay and our estimate of the other costs that will affect local authorities.
As in previous years the cash limit on rate support grant in 1978–79 will be adjusted for the effects of certain variations in costs which are particularly uncertain. These are, as the House knows, loan charges and certain elements in the housing revenue account which affect the rate fund contribution.
The cash limits on grants to local authorities in 1978–79 will be reviewed if new legislation is enacted, or brought into operation, or if changes are made in Government policy which entail changes in local authority expenditure. The Government would also be prepared to review the position in the light of all the circumstances of the time if the pace of pay and price increases generally, or of those which affect local authority expenditure, were substantially higher, taken as a whole, than those implied in the cash limits.
I now want to consider the arrangements for distribution of rate support grant. First, I draw attention to decisions of general effect. We propose to maintain the 67½ per cent./32½ per cent. needs element-resources element ratio. This was a point on which the associations were all agreed. We propose to maintain the present levels of domestic rate relief at 18½p in the pound for England and 36p in the pound for Wales. The House will recognise that one of the main themes running through the settlement for this year is the quest for greater stability, and the Government consider that to make changes in this area would have run counter to this need and increased ratepayers' burdens. We have also decided—in agreement with the authorities, which want to know where they stand when they set their rates—that changes in data after November 1977 will not alter the distribution of grant for 1978–79. There are some divided views on this matter, but I believe that this will give a greater degree of certainty for local authorities when they are trying to draw up their budgets later this year.

Mr. T. W. Urwin: My right hon. Friend will be aware that his optimistic comments earlier about the facility provided for councils and local authorities to maintain labour forces and manpower at existing levels without affecting services in any deleterious way are not universally accepted. However, he will also be


aware of the deeply held reservations of many of the shire counties, including Durham, where a claim is made that on the needs element they will be losing, on their calculations, £2·4 million. That is a substantial sum to find from rate balances which were already substantially raided last year. Is it not possible even now for my right hon. Friend to readdress himself to this question in order that counties such as Durham, with high rates of unemployment, come out a little better than they so far appear likely to do?

Mr. Shore: I always pay great attention to my hon. Frend, who, I know, follows the affairs of his county with close attention and concern. However, I ask him to be patient a little longer, because I have a lot to say about the matter, in which I believe hon. Members on both sides of the House are particularly interested at this time—that is, the actual method of the case for the particular pattern of needs distribution which we have adopted. I was actually trying to get established the more neutral aspects of the rate support grant settlement and get them out of the way before we turn to the more interesting question and argument about needs distribution.

Mr. Tim Sainsbury: The Secretary of State referred to the retention of the disparity in the domestic element between Wales and England. Will he tell the House why, when that disparity was originally introduced to deal with the alleged extra costs in Wales of water before equalisation, it is being continued long after those extra costs have been absorbed?

Mr. Shore: That is a point which we obviously considered, but I believe that we should see what is the outcome—certainly in the first year—of the new, very partial equalisation scheme before we look again at the Welsh case. But I should rather not anticipate what I think will be a more full treatment of the matter that my hon. Friend will give it when he comes to wind up the debate.
I should like to get through these relatively uncontroversial matters first. I remind the House that we propose to use the resources element to give authorities compensation for the mandatory rate relief that they give to charities. That is a change which many have asked for

and which I am glad to be able to announce. All of these, of course, affect the overall distribution.
I am afraid that I must now weary the House with two rather technical but very important points that I must mention right away, as they could lead—and are leading—to some misunderstandings.
We have made some adjustment to the education and labour-cost data as they will apply in 1978–79. The educational data have been resorted, that is, the numbers of students being educated by an authority have been reattributed to the authorities where they live. This is only fair, because the authorities where the students live make a payment to the authorities where they are educated. Unless, therefore, the reattribution—technically known as resorting—is done, the educating authority gets two payments—one via the RSG and one from the authority where the students live. We thought that had to be changed. On labour costs the point is simply that we now have better data—it covers two years, not one and now includes women and their earnings as well as men.
I was reluctant, because of my wish to achieve greater stability, to make any changes of this sort. But in both cases the changes were intended to correct what were clearly anomalies and were strongly recommended by the local authority associations. The changes are once-andfor-all adjustments. I mention them here only because in some cases they could give the impression that the changes arising from the new distribution formula are larger than they really are. For example, of Bury's gain this year of 7·9p, 6·2p arises from the resorting of education data.
The resorting of educational data and the changed labour cost factor account for a substantial part of the total changes in this settlement. It is a point that is not frankly brought out by the ACC in the document that I know has been widely circulated to hon. Members on both sides of the House.
The crucial issue—perhaps the only one this year that might lead to some controversy—is how the rate support grant, and particularly the needs element, is to be distributed between authorities.
Discussion of needs element distribution is always detailed and technical, and


there is much scope for misunderstanding and confusion. Before we get too far into the subject, I think that it is worth reminding ourselves what needs element is for. We can judge the acceptability of the distribution only against what we are trying to achieve.
Let me begin with the obvious. All local authorities have needs. At their simplest, they arise from the numbers of people living in the area. Indeed, nearly half of the needs element goes to authorities in proportion to their population. But, of course, not every member of the population places the same demands on the services provided by local authorities. Schoolchildren, elderly people and one-parent families, for example, place greater demands on the services of local authorities than do fit adult workers. These demands lead to greater expenditure, and the other half of the needs element goes to evening out the differences in expenditure between authorities that the needs generated by these factors create.
We are not, moreover, dealing, as hon. Gentlemen well know, with a static situation. Needs, and therefore variations in expenditure, change year by year—to a surprising extent, considering that we are quite a small country. There is a continuing movements of people and a continuing change, as a result, in the distribution of needs. Any system of grant that tries to deal fairly with needs must recognise changing needs and provide for them.
How do we measure these variations in need under the present system? First, we look at factors such as the number of schoolchildren, which anyone might think would be evidence of additional need. We then, using a statistical technique, see whether there is any correlation between these factors and the actual expenditure of local authorities. Where there is such correlation, it provides for us a weighting for such a factor. We then use a package of such tested and weighted factors to distribute the grant.
I know that there are criticisms of this system. The biggest question mark, perhaps, hangs over the assumption that the pattern of expenditure is the best test of need. I understand that. But what is the alternative? We all know that need is a highly subjective concept. It would, I

suppose, be possible for me to substitute my own judgment in place of the pattern of expenditure which results from the totality of decisions by individual local authorities, but that would not seem to me to be sensible or democratic. I should hate my task of coming before the House and trying to justify my reasons for reaching the decisions that I did.
Let us look at the systems of need assessment proposed for this year as an alternative by those who do not like the present system of regression analysis. First, there was the so-called "simple system" of the Association of County Councils. As presently developed, it will not do. It proposes that the bulk of the grant should be distributed on the basis of population, divided into defined age groups—for example, ones to 4s, 5s to 18s, over 65s. The remainder would then be distributed on the basis, for example, of population sparsity and population density.
The trouble with this system is, I believe, that there is no evidence provided to judge the appropriate weighting or the choice of these particular factors. Certainly the other local authority associations would disagree with the ACC's choice and, indeed, its weightings. Therefore, to try to use such a system, without any agreement on what the calculation should be or the choice of factors and the weightings to be given to them, would lead us into a Bedlam of conflicting value judgments.
The other system—or, rather, nonsystem—put forward is to give the same share of grant to authorities as they got last year.

Mr. Michael Heseltine: When the Secretary of State says that we would move to a system of Bedlam, with competing and conflicting value judgments, how does he square that with the statement that he has repeated time and again from that Dispatch Box—that he has deliberately set out to shift resources from the shire counties to the urban areas?

Mr. Shore: I am able to do this, quite frankly, because the needs indicators enable me to justify the direction in which the resources are moved. I say in all sincerity to the hon. Gentleman that if the needs factors were to indicate that there were parts of the country outside


major cities and towns—I think that last year Cornwall was rather well served because of the particular needs formula that emerged—whose needs clearly justified their having extra resources, of course I should be in favour of their receiving them. Otherwise, there would be a total inconsistency in the approach.

Mr. Heseltine: But the essence of the calculation that the right hon. Gentleman reaches is that he selects the formulae that are fed into the calculation. There is no automatic emergence of needs solutions. It is his decision.

Mr. Shore: What happens is that there is a technical committee, consisting mainly of representatives of the different local authority associations. They look at particular formulae and recommend the one which they think is the best. Of course, in the end it is my job, as Minister, to decide. But I have explained to the hon. Gentleman, and I have tried to explain to the House, why I believe that the alternative put forward is not one that I can reasonably adopt or that the House would wish me to adopt at the present time.

Mr. Arthur Palmer: I have here a letter from the Chairman of the Avon County Council in which he alleges that for three years now money that could be well spent in Avon has been diverted for the benefit of London. Is that an accurate view?

Mr. Shore: I shall deal with the London part of the settlement a little later. It is certainly true that both London and the metropolitan districts generally have gained over the past three or four years. That is entirely true. I shall come to that point and try to explain it.

Mr. Hugh Fraser: On this matter of need, which is a sort of philosophical point, surely, the problem is that the Secretary of State is asking himself the wrong question, trying to assess need in terms of current expenditure. These needs frequently occur because of basic lack of capital expenditure, which a change in current expenditure simply cannot begin to meet. That is why there is such injustice to the counties.

Mr. Shore: My position is very straightforward. I am trying to find as acceptable a system of needs assessment as possible. My mind is not closed to any serious proposals that are put forward. But I believe that we have quite a long way to go before we can find an alternative system which does not have some of the admitted defects of the present one but which at the same time has superior advantages. I am afraid that we are a good way from that.

Mr. Arthur Jones: rose—

Mr. Shore: I feel that it would not be right for me to turn this into an extended Question Time, as I should be poaching and encroaching upon the very limited time available.

Mr. Jones: The right hon. Gentleman mentioned population. In past years decline of population has been taken into account in the analysis. How is it that we have never seen increased population taken into account in the rate support grant calculation?

Mr. Shore: Increased population is taken into account. There is a per capita basis for a substantial part—about half—of the needs grant element.
I was dealing with the proposal—I could not describe it as a system—to give the same share of grant to authorities as they had last year. In other words, those who advocate this say that we should ignore all changing needs and resources. In my view, that would be to throw away our responsibility for trying to help the needy and to substitute the past for the present.
I come back, therefore, to regression analysis. For all its faults, it is the best system that we have for ensuring that authorities with the most serious social and other problems need pay no more in proportion to their population than do those with the least serious problems. That is the only basis on which to judge the distribution. The amount of grant, or the share of the total that an authority received last year, is not the right test: the former is wrong because it ignores inflation, and the latter because it ignores changes in authorities' circumstances.
The crucial question is whether those authorities whose needs are growing in proportion to their population are getting


a sufficiently enhanced share of the total needs element to reflect that change. This will automatically mean that authorities with falling needs in proportion to their population will be getting a reduced share. In short, there will, and should be, changes in grant where the needs assessment shows that an authority's needs per head of population are changing in relation to those of other authorities. The policy of concentrating resources in those areas with the most pressing social and economic problems is, therefore, to be continued in 1978–79.
Apart from the offset made by the agreed technical changes in the use of resorted educational data, which I mentioned earlier, those areas with partnership schemes and inner city programmes will all benefit from extra resources. The ACC has claimed that this will not happen. It is wrong. The formula allocates additional grant to all the partnership authorities. I have no doubt that this policy is the right one, and if more resources had been available, I should have wanted to do even more to help such areas combat the extensive social and economic deprivation that they have to face. It would be absurd to deny that the areas that face heavier pressures need more resources to meet them.
I remind the House, as I did last year, that this is not a major new departure and innovation by this Government. The right hon. and learned Member for Hexham (Mr. Rippon), when he was Secretary of State for the Environment, had this to say when he presented his RSG on 22nd January 1974:
If the House considers what was said last year about the problems of inner cities it will realise that it is not unreasonable to redistribute the grant this time so as to give greater benefit to them to meet their needs.
Indeed, he went further. He spelt out to the House the consequences of this concentration on the needs of our great cities. He said:
We have to bear in mind that if—as we believe we should—we are to help the cities with their special problems both with general expenditure and housing, the counties must accept that that will to some extent throw a greater burden upon them, giving the same total expenditure."—[Official Report, 22nd January 1974; Vol. 867, c. 1472–4.]

Mr. Eldon Griffiths: May I, as one who has always supported what the Minister has done and

what my right hon. and learned Friend did to shift some of the resources to the big city areas, ask the right hon. Gentleman whether he will accept that the real problem is that he has now gone too far? Is it not a fact that he has now reached a situation where London, with one-seventh of the population, is to get well over one-fifth of the needs grant, and that that is no longer acceptable?

Mr. Shore: I shall shortly be coming to the example of London if the hon. Gentleman will be patient for a moment. It is something that the general principle of the shift of resources—I accept that this is often at the expense of the counties—in favour of the hard-pressed urban areas and inner cities appears to be a shared objective and that what we are now arguing about is not the principle and the direction, but merely the extent. The hon. Gentleman has established an important point.

Mr. Reginald Eyre: Just so that the right hon. Gentleman should not think that the other metropolitan areas in the country outside London are benefiting under this system, let me tell him that if the pluses under partnership and rate support grant are taken into account, and if one then takes into account the minuses, having regard to the reduction of improvement grants, council house improvement schemes, local authority home loans, and so on, one finds that those metropolitan authorities are worse off.

Mr. Shore: If the hon. Gentleman is inviting me to increase the distribution in favour of urban areas because he believes they are not getting enough, I am certainly prepared to consider that, too. [Interruption.] I should like to get on with my speech in spite of the excitement of the hon. Gentleman.

Mr. Anthony Steen: rose—

Mr. Shore: No. I will not give way for another moment because I believe that the House will get very testy with me if I do not move on.
The second feature of the 1978–79—[Interruption.] The House is obviously enjoying the rate support grant debate! The second feature of the 1978–79 rate support grant distribution arrangements


is our attempt to ensure a greater measure of stability in authorities' finances. A number of deputations from local authorities made very effective representations about their problems in the light of last year's 1977–78 settlement. I pay tribute, incidentally, to the many hon. Members, on both sides of the House, who reinforced their local authorities in putting forward a very cogent case on their behalf.
I well recognise that the 1977–78 settlement was a tough one. With both a reduction and a redistribution of grant, it bore heavily on certain authorities These authorities were faced with a sharp dilemma betwen large rate increases or cuts in services. I shall not labour the point, but even large rate increases would not have brought rate bills in some areas up to the national average. However, I recognise that the pace of increase in rate bills can be almost as important as absolute levels. But I have decided to moderate the increases that otherwise would flow this year. I do not want cuts in services in 1978–79.
Stability is not just a matter of overall grant totals, as I have already said. It is also a matter of changes in the amount of grant paid to individual local authorities. I am, therefore, taking two important steps to limit changes in the distribution of RSG to authorities in 1978–79. First, year-on-year changes in the pattern of grant distribution will be flattened out, or "damped". This will be achieved by combining the 1978–79 needs assessment with those for 1975–76, 1976–77 and 1977–78, and using the average for all four as the basis for needs element distribution. That is "four-year damping", and, obviously, it is a very welcome feature for those who would be otherwise adversely affected.
Secondly, the authorities which would otherwise lose most will be protected by a safety net.

Mr. Stephen Ross: Would the Secretary of State accept that, if the settlements of the four years from the base of 1974–75 have been disastrous anyway, damping the figures is of no use whatsoever to counties like mine?

Mr. Shore: I can only say that if there were no damping, I believe that many counties—I would have to check the hon. Gentleman's area in detail—would be

adversely affected and, indeed, very seriously so, but for the—

Mr. Steen: rose—

Mr. Shore: No, I will not give way. The hon. Gentleman was concerned with a matter that arose earlier, and I think I dealt with that.
I am trying to deal with the safety-net concept, which is a new, and, I think, an interesting one. I must tell the House here again that the ACC, which has put its memorandum widely around, has got it wrong. For reasons which baffle me, it has assumed that a safety net should be calculated not on the basis of the 1977–78 distribution arrangements brought up to date, and the 1978–79 arrangements, but on the actual shares of grant between the two years. This assumes that I should ignore a major factor of the 1977–78 settlement—the need to mitigate the rise in London's rate bills—which was specifically approved last December by this House. Nevertheless, there has been a lot of misunderstanding, and I think it is worth spelling out the arrangements.
The first stage is to work out the needs element that an authority would have received if the 1977–78 distribution arrangements had been used again for 1978–79. Naturally, this will not be the same amount as last year, because the size of the total needs element in cash terms and, to a small extent, in real terms, has grown. Nor will it be the same share of the total of last year, because there would have been changes in the intervening period, and account has to be taken of the further relative decline in London's rateable resources. It would obviously be quite wrong, and inconsistent with the principles of needs element payments, to take no account of such changes.
The second stage is to calculate what each authority would receive under the new distribution arrangements if there were no safety net—that is, including the four-year damping.
Where these calculations show that an authority would lose as a result of the change to the new arrangements, any loss greater than the equivalent of a 2p rate will be met by a specific safety net payment. I think that will be welcome and beneficial to a considerable number of


countries, as well as to some metropolitan districts.

Mr. Tim Renton: In the light of what the Secretary of State said, the 2p safety net would seem to be ineffective for many county councils because of what appears to be an automatic increase this year in the amount of London grant. The West Sussex County Council, which has been hit worse than others, with an estimated 9½ per cent. reduction in its rate support grant, calculates that this year it will lose £3·3 million in rate support grant, which is equal to a 3p rate. But the Government say that this is a 2p reduction, and the only justification appears to be an automatic increase in the amount of rate support grant in London.

Mr. Shore: That lengthy comment greatly discourages me from giving way to other hon. Members. The hon. Gentleman obviously has not followed closely the immediately preceding part of my speech. I said that the ACC was comparing like with unlike. We have not set out to achieve a 2p limitation on all the possible changes that might occur in 1978–79. I have had no intention of doing that, and the local authority associations have had no reason to believe otherwise. We set out to limit the changes that would have occurred, if we had used the 1977–78 formula in 1978–79, with a 2p safety net. It was entirely sensible to do that. There were a number of changes, some of which were beneficial, including the four-year damping.
I should now like to turn to London. We propose to repeat the scheme for grant distribution and rate equalisation within London which was first introduced last year and was widely welcomed by the London authorities.
The arrangements for London are rather more complicated than for the rest of the country. London's grant depends not only on the regression analysis but on the size of the London adjustment. This is an arrangement that reduces London's entitlement—to the benefit of the rest of the country—because London has in general higher rateable resources than elsewhere.
We have to weigh up the merits of taking money away from London to help other authorities or of allowing London authorities, which face some of the most

difficult social and economic problems in the country and where residents face exceptionally high rate bills, to benefit from their higher resources. What adjustment is to be made and how it is to be made for London has always faced every Minister with responsibility for rate support grant.
I think that it is a great loss to the House today that those two admirable and balanced students and advocates of London's needs—the hon. Members for Hampstead (Mr. Finsberg) and Hornsey (Mr. Rossi), who frequently speak from the Opposition Front Bench—are not with us on this occasion.—[HON. MEMBERS: "Yes, he is."] I am sorry. I am sure that the whole House will give a warm welcome to the hon. Member for Hornsey. Indeed, I feel it only right to quote his wise words in the debate on 12th December 1974, again on the rate support grant. The hon. Gentleman said:
It would therefore seem to be right that London ratepayers, having to bear the burdens of others, should receive a more generous distribution of the rate support grant than the Secretary of State proposes to give in these orders. If it is too late now for him to do anything about this, may I urge him to ask for some rethinking within his Department as to the peculiar and difficult position of London and the burden upon the London ratepayers?"—[Official Report, 12th December 1974; Vol. 883, c. 884.]
I am not suggesting that this is an easy matter. It is not. We have to try to get the balance right. We have set London's grant entitlement in 1978–79 to secure that, if our guidelines are adhered to, the average London domestic rate bill will go up by the same cash amount as the national average. London's domestic rate bills are over 50 per cent. higher than those elsewhere. There is a gap of over £50. I thought it quite wrong in present economic circumstances for this gap to widen any further. I should make it clear that does not mean that other authorities will be giving anything to London. London will simply be allowed to keep more of the benefits of its own rateable resources. As it is, London will still lose £270 million in clawback, which will benefit the rest of the country.
This is the distribution package that I propose for 1978–79. I recommend it to the House as striking the best balance between continuing to recognise the pressures on those areas with concentrations of social and economic deprivation


and avoiding excessive losses of grant for individual authorities.

Mr. Eldon Griffiths: I think that the Secretary of State has been generous in giving way. Regarding London, is it not also the case that the calculation of the formula has reduced the amount that is generally available for children, particularly in the receiving areas from the London overspill, while at the same time it has increased the relative amounts for elderly people living alone in those parts of London which are losing population? Does the right hon. Gentleman agree that this shift in the complex balance of the position has caused those areas which are receiving population from London to have a grievance against those areas of London which are decanting population?

Mr. Shore: I am not suggesting that other areas of the country have not got problems; they have. Indeed, some areas are trying to meet them in particular ways. I remind the hon. Gentleman of new town problems in certain areas. We have made a specific move to help such areas.
The net effect of the difference between this year's formula for London and last year's formula carried forward this year is the equivalent of a 0·15p rate against the rest of the country. I believe that has to be borne in mind and seen in the context of all the other changes which bear upon the changed distribution of the rate support grant in 1978–79.

Mr. Giles Radice: I accept my right hon. Friend's general strategy and the shift of resources to London and the inner cities. But will he tell the House why he removed unemployment from the needs assessment for 1978–79?

Mr. Shore: Specifically because, when we tested the use of the unemployment indicator across the country, we could not find any serious correlation between expenditure needs and the actual incidence of unemployment. Because it was, as it were, an unsatisfactory indicator of particular need, it was withdrawn from the 1978–79 formula, although it is still there because of the carry-forward from 1977–78.

Mr. Steen: Will the right hon. Gentleman give way?

Mr. Shore: No. To sum up—

Mr. Deputy Speaker (Sir Myer Galpern): Order. The mere fact that the hon. Member for Liverpool, Wavertree (Mr. Steen) has shifted his position does not alter the fact that he remains the hon. Member for Wavertree.

Mr. Shore: To sum up, the keynote of this year's settlement is, I believe, greater stability. We have maintained the grant percentage and have taken steps to limit the effect of changes in distribution.
I believe that local authorities will be able to maintain their standards of service in 1978–79 with rate rises, on average, in single figures. When we talk about averages, we know that very roughly half the authorities will be below the average and that very roughly half of them will be above the average; that is a characteristic of averages. However under the settlement the great majority of authorities will be able to maintain their standard of services without imposing unmanageable burdens on their ratepayers. I recognise that some authorities towards the extreme edge of the range may face real problems—that will not apply to all of them. I hope that they will resist the temptation to cut services. What I want to make as clear as I can is that if authorities decide to make cuts, the decision is entirely and solely theirs. There is nothing in this settlement and rate support grant order which requires them to do so.
Having excited right hon. and hon. Members on the Opposition Benches, I must say that if there are still Opposition Members who think that I have been harsh I ask them to reflect on what they would have faced last year as well as this year if the hon. Member for Henley (Mr. Heseltine) had been sitting on the Government side of the House. Anyone who looks back at last year's rate support grant settlement will recall that the hon. Gentleman said that the Government had failed to grasp the overall need to reduce public expenditure on a more significant scale than they had achieved. He went on to say that I had missed a great chance. He said that the cuts that I had made had been engineered to cause the minimum impact upon people's daily


lives. I do not believe that anyone on the Opposition Benches should have imagined that he would obtain a better and easier settlement if the hon. Gentleman had been sitting on the Government Benches this year.
I believe that this is a fair and sensible settlement, and I accordingly recommend the orders to the House.

4.53 p.m.

Mr. Michael Heseltine: Like the Secretary of State, I shall start with the relatively uncontroversial parts of my speech. I thank the right hon. Gentleman for his kind remarks about the present situation in which the spending of local authorities is now under control, the authorities co-operating with the Government in bringing that about. As the local authorities are in the main controlled by the Conservative Party, I was not the least surprised to hear what the right hon. Gentleman had to say. However, it is good that he has put on record that it is Conservatives in office who in practice have secured so much of the improvement.
I shall concentrate on the 1978–79 order as, quite rightly, the right hon. Gentleman seems to have done. There are three false assumptions that I shall talk about in connection with the order.
The first false assumption is that it is right to deprive systematically large sections of the country in order to help specifically other parts. That is the one quarrel that I have with the quotation that the right hon. Gentleman took from the speech that I made from the Opposition Dispatch Box during the equivalent debate last year. At that time I believed that there was a public expenditure crisis. I believe that the mood of the country at that time would have responded to a clear Government initiative to reduce public expenditure. If I had been at the Government Dispatch Box, that would not have meant my seeking to impose a wholly discriminatory settlement upon the people of Britain, expecting one part to suffer and the others hardly to bear the burden. That was the substance of my complaint to the right hon. Gentleman last year, and I do not withdraw a word of it.
The second false assumption is that which is inherent in the order—namely, that the cost increase can be contained

within the figure of 9 per cent. that the Secretary of State has put forward.
The third false assumption is that the present system of regression analysis still reflects an objective and accurate assessment of local need.
First, let us consider the whole question—this I would accept, as my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) and the right hon. Gentleman were implying—of deciding upon the scale of switching resources rather than upon the principle of making allocations, which is bound to be inherent in any judgments about the priorities of the rate support grant. In considering the scale of the switch I believe that my hon. Friends are right in expressing grave anger and resentment at what the right hon. Gentleman has been doing over the past two to three years.
In 1974–75 London and the metropolitan districts received £1,140 million, which amounted to 42·5 per cent. of the needs element of the settlement. By 1977–78 their percentage had risen to 46·6 per cent., which gave them £1,727 million, an increase of £587 million—in other words, an increase of 51·5 per cent. over the three years. If anyone happened to believe that a 50 per cent. increase was in some way a bonanza for those areas, it is fair to point out that under the Government prices rose by 80 per cent. in the equivalent period. However, at least the Government recognised that some measure of compensation was due by increasing their support for the urban areas by about 51·5 per cent.
In 1974–75 the shire counties received 57·5 per cent. of the needs element, which amounted to £1,546 million. If they had been treated exactly as the urban areas, they would have received in the 1978–79 settlement, which we are now discussing, £2,342 million. However, in practice they are to receive only £1,980 million. In other words, there is a shortfall on an equity basis of £350 million in the shire counties for one financial year.
When I first pointed out the shortfall to the right hon. Gentleman during Question Time, it was apparent that he had never heard the figure calculated before. He has never realised that in all the minutiae of the detailed calculations the totality meant that the shire counties


received £350 million less than they would have received if they had been treated in the same way as the urban areas.
If hon. Members who represent shire county constituencies want to know why there are such vastly greater increases in domestic rates in the shire counties than in the urban areas, it is precisely because the local authorities in the shire counties are having to find the equivalent of £350 million a year that they would have had found from the rate support grant if they had been treated on an equity basis.

Mr. Stanley Newens: If the cuts in public expenditure that the hon. Gentleman advocated had been carried out, would the shire counties have received more or less than they are at present receiving? If he had been able to impose the cuts about which he was talking, is it not the case that the shire counties would have received less?

Mr. Heseltine: The hon. Gentleman is missing the point. The complaint of my hon. Friends is not directed to questioning the constraint on public expenditure, which we all expect and understand, but that certain parts of the country have been significantly discriminated against in the allocation of the burden. The measurement of the discrimination against the shire counties is £350 million in one financial year. If we borrow the argument that in part the right hon. Gentleman was advancing—namely, that population is a major factor in reaching these calculatiom the anomalies are even wider than they appear from the simple figures that I have given.
By 1974 approximately 62 per cent. of the population lived in the shire counties and received approximately 62 per cent. of the needs element. Today, only three years later, more people actually live in the shire counties, but their share of the needs element is down from 62 per cent. to 52 per cent., and one cannot persuade them that this reflects a fair and independent assessment of what local government need is all about.
That is the national position—what the Secretary of State describes as the average position. But when one gets down to individual local authorities and

the problems that they face, the anomalies are often a great deal more flagrant. Under the Secretary of State's calculations 14 shire counties in 1978–79 will actually receive much less cash than they got two years ago, although there has been a dramatic increase in costs and prices since then. The most glaring examples are as follows. Cambridgeshire will get £3·4 million less compared with two years ago. Essex will get £2·8 million less. Hertfordshire will get £3·5 million less. My county of Oxfordshire will get £2·8 million less. Surrey will get £6·7 million less, and West Sussex £4·9 million less.

Mr. Newens: But would the hon. Gentleman have given them more?

Mr. Heseltine: The hon. Member must understand that there is a willingness to accept contraint on public expenditure if it is fairly balanced, but one cannot say to the electors in these counties that there is any justice in this arrangement and convince them that they should bear a disproportionate share of the economies that are necessary.
The Secretary of State and his hon. Friends now apparently share the view, in spite of these ever-growing injustices in the allocation of resources, that there is no need for any harsh consequences to arise. The authorities that I have listed apparently do not have to cut any services, make any redundancies or do anything beastly like that. The cut will simply be absorbed. But the Secretary of State does not say how it must be absorbed or what sort of rate increases are necessary to permit that. What calculations has he made, on the assumption that there is to be no cut in services or reduction in manpower, of the rate increases that will be necessary in those counties?

Mr. Shore: I hope that the hon. Member will make it plain that I am placing no limitation on the kind of rate increases which individual authorities may wish or have to make. It is for them to decide in the light of the value they place upon their services.

Mr. Heseltine: The Secretary of State is saying that there will be no constraints on rate increases, which is a strange state of affairs under a Government who are


constraining every other index of industrial activity. The one thing he does not care about is how much rates go up. There can be price and wage constraint and massive taxes, but the Secretary of State has no interest whatever in the matter of rates. That statement takes a lot of beating for sheer abdication of responsibility by the man who holds the responsibility for local government. I have no doubt that when the local authority representatives announce their rate increases, the electors in those constituencies will remember the advice given today by the right hon. Gentleman.
So far we have dealt only with the Secretary of State's figures, and they are bad enough. The figures produced by the Association of County Councils are dramatically worse. I have those figures before me, but I do not intend to go through them because the right hon. Gentleman believes that they are wrong. It would have been much better if he had actually countered those figures in advance of the debate so that we could have been properly briefed and could have seen the discrepancies between the two sets of calculations.
It would have been simple for the Secretary of State to have given an undertaking that the shire counties would not be treated in the disparate way that he has chosen. I am not in the least impressed with the argument that somehow the "damping" process will come to the rescue of the ratepayers. The logic of that process is simple. The Government simply say that each year they have made things a little bit worse, and that this year it will be the worst of all possible positions. Therefore, in order to avoid the ultimate logic of what they have done they are to aggregate the worst excesses of earlier years with the worst excesses of this year to produce a moderately bad settlement.
The right hon. Gentleman has given an assurance this year in respect of the 2p limitation of effect, but the underlying calculations ride on. Next year, if the Secretary of State is still making the rate support grant settlement in collaboration with the sole survivor of last night's storms of the Lib-Lab pact, who is with us today—the hon. Member for Isle of Wight (Mr. Ross)—although we shall seek to ensure that this is not then the responsibility of the right hon. Gentleman,

the underlying calculations will remain. The 2p limitation, as I understand it, will operate for only one year. I do not believe, therefore, that the damping palliative will commend itself to the ratepayers concerned.

Mr. William Molloy: Does the hon. Gentleman not agree that what he is saying will command the collective support of his right hon. and hon. Friends, but that when the Conservatives make their demands at Question Time for increased public expenditure they ignore the fact that this would lead to a massive rise in both taxation and the rates throughout the country, and not merely in London? Does he not agree, in the light of what London has been paying in the past half decade, that my right hon. Friend is proposing only to bring that into balance and to provide some respite for millions of Londoners?

Mr. Heseltine: The logic of that argument must appeal to the hon. Member since he represents a London constituency. But a large number of people do not live in London, and they cannot understand why, at the height of the economic crisis, their situation should deteriorate so much more than that of the people who live in London.

Mr. Molloy: It has not.

Mr. Heseltine: As I have shown, there is a considerable worsening in the relative position of the ratepayers outside London over the past three years, and there can be no argument about that.
This is not only a question of the harshness arising from the Secretary of State's assumptions about the allocation of rate support grant. There is an implied assumption that authorities should use the balances that they have accumulated and that this will in some way ease the impact of his decision.
But the fact is that the prudent authorities which have accumulated balances have been living on those balances for recent years, and it is now becoming increasingly difficult to rely on the resources which have been saved in the past. As we have seen from the evidence submitted by Kent, it is difficult for that county to contain rate increases because


it has used up the balances which were hitherto available for that purpose.

Mr. Eldon Griffiths: Is it not a fact that within London it is generally the high-spending Labour boroughs which have been given more and it is the prudent boroughs which have acted in accordance with the Government's call for constraint in public expenditure which are to be given proportionately less?

Mr. Heseltine: My hon. Friend is perfectly right. I shall deal with this when we come to the basis for the regression analysis system.

Mr. Ronald Brown: The hon. Gentleman says that the Labour boroughs have received most. Is he not aware that Bromley, Sutton and Richmond are not Labour controlled? Will he get his facts right before he comes to the Dispatch Box?

Mr. Heseltine: I am sorry that the hon. Member's representations on these detailed calculations did not apparently get through to the Secretary of State. No doubt when the hon. Gentleman is giving advice to the electors of those boroughs in the May elections next year he will know what to tell them to do.
There is one other special case which merits attention from the Secretary of State in the deliberations on the rate support grant. That is the case which has been put to him and to me by the representatives from the Isle of Wight. We all know that there are many involved calculations and considerations, and I shall certainly not stand here and say that it is possible on the Opposition Benches to work out the intricacies of the particular claims of the Isle of Wight, but I believe that the representatives hale put forward one special claim in their memorandum which merits the consideration of the Secretary of State. I hope that it will be dealt with in the reply to the debate. It is the fact that there are certain costs associated with being an island which are different from those which prevail on the mainland.
The Secretary of State will see that on page 6 of the memorandum submitted by the Isle of Wight there is a list of the sorts of costs incurred by local government and reflecting the distance and the special travelling problems associated

with the island status of that authority. Although I would give no personal commitment, I believe that it is something that in Government we would look at without any hesitation at all.

Mr. Shore: I assure the hon. Gentleman that we are very much alive to the problems affecting the Isle of Wight and perhaps one or two other such places as well. The difficulty, as he well knows, is to identify and isolate particular factors which could be taken into account in a rate support grant settlement. But, like him, we are also anxious to be as fair as we can to any authority which can establish need.

Mr. Heseltine: The Isle of Wight has put forward a list of detailed factors, and there was a special factor of severance to be fed into the rate support grant settlement.
The Secretary of State referred during the course of the afternoon to the problems of the urban areas, and my hon. Friend the Member for Birmingham, Hall Green (Mr. Eyre), in an intervention, made what I thought was an immensely damaging point. It was that, despite the fact that we now have urban partnerships and an urban programme, when we add up the degree of Government support and the calculations implicit in the rate support grant, it is apparent that the degree of national support for the crisis areas—to use the terminology of the Secretary of State—is suffering as well.
I understand that Liverpool is to lose 1·3 million, Leeds £1·6 million and Birmingham £0·5 million in the calculations. In that concept, the only justification to which the Secretary of State could have recourse is to argue that all the programmes for the partnership arrangements will then be brought in to add to that situation.

Mr. Shore: All the areas that the hon. Gentleman has mentioned are gainers as a result of the basic rate support grant settlement that we have made. To some degree the extent of their gain has been offset by the resorting of educational data to which I referred earlier. By far the biggest single element of change in this settlement is due to the resorting of educational data, because Birmingham, Liverpool and Manchester are all major


centres of education and have suffered this year because of that. The whole thrust of the needs element is working in their favour.

Mr. Heseltine: As the question of reallocation in regard to education was well known to the people who looked at this in detail, I should have thought they would be able to make that calculation for themselves. I believe that the Secretary of State does not recognise that he is tending to withdraw support from urban areas to spend money as they think is right, and concentrating more national support on selective national intervention, with all the bureaucratic process that goes with it, and therefore tending to use the same people and the same system which has done so much to create the crisis in the inner urban areas in the first place.

Mr. Steen: Is my hon. Friend aware that a few days ago in Liverpool the Secretary of State declared the partnership arrangement for the inner area and that part of that area is about five miles away from the inner city area? Is he aware that that is what the Secretary of State means by the inner city?

Mr. Heseltine: As my hon. Friend knows, I have just visited Liverpool to look at the extraordinary crisis which faces the people there. There is no way in which it could conceivably be misunderstood. The wider the partnership area is spread, the less impact and the more the resources are dissipated, thereby achieving little of the new momentum which is so obviously and patently necessary.
The second false assumption that the Secretary of State has taken into his calculations is that the underlying rate of inflation can be contained within the 9 per cent. calculations that he has put forward. When we remember that there are five settlements—including two with manual workers, craftsmen and firemen, where both employers and unions have cast doubt on the ability of the cash limit to meet the resources needed—we realise the scale of risk that is built into the Secretary of State's calculation. I should be very interested to hear him say whether he still believes that the 6 to 10 per cent. range that the Government have set out as their target for

setlements in order to achieve their overall strategy, is realistic in the light of, for example, the offer that they have made to the firemen.
Within this settlement that we are discussing, there will now be two settlements with the firemen. Even with a settlement of the firemen's strike, there will have to be two additional increases as a result of the basis of the deal that the Government have put forward. How many local authority unions, noting this as the basis for settlement with the firemen, will say that they also want so much now and a guaranteed increment built into the system for the autumn of next year? Does the Secretary of State really believe that all this, starting at a top level of 10 per cent. and working from there up, will genuinely be held within a 9 per cent. inflation figure for local government over the period of time in question?
A suspicion remains that the Secretary of State is actually calculating not on levels of this sort but on being able to adjust the position sometime towards the tail end of next year, when the electoral climate might look very different from what it is at present.
Mrs. Coker of the ACC has written an eloquent and persuasive letter indicating her anxiety about the likelihood of settlements. The evidence coming from local government is that it is not convinced by the optimism of the Secretary of State in this matter.
There is a further assumption, and that is the one to which my hon. Friend the Member for Bury St. Edmunds referred. It is whether regression analysis is now capable of genuinely reflecting the needs of different areas. From talking to people in local government, I believe that the consensus is that, for various practical reasons, the system is no longer reflecting needs accurately. This is largely for one reason—that much of the statistical information upon which it is based goes back to 1971 and is therefore often very significantly out of date. As a consequence of these changes, the judgments which the Secretary of State increasingly has to make are being substituted for the factual, objective and independent assessment which would give credibility to the system. That is the real and perhaps the most significant challenge that I make


to the Secretary of State on this particular matter.
The Secretary of State says that it is all worked out by experts coming together to analyse the situation and that they then put forward some agreed commonsense objective conclusion. But it is not like that. They come together and look at all the options and they brief the Secretary of State on what will happen if this statistic or that factor is fed in, or if one or other factors are taken out. The Secretary of State, with that range of options before him, then makes a calculation.
The Secretary of State will perhaps not wince from the charge that the suspicion is that there is at least as much politics as need in the judgment that is made. How can he expect that charge not to be made when we recall his reply a few seconds ago to the very important question why unemployment has been taken out this year when last year it was fed into the calculation for the first time, as part of some brave new world? One would have thought that if unemployment had gone down and was less of a problem, it would be possible this year to take it out, having used it in the special circumstances of last year. But in reality, in September 1976, when the Secretary of State was making last year's judgments, unemployment was 1¼ million, and this September, at the time of this year's judgments, it had risen by over 100,000. How can it be less of a factor this year than it was last year?
There is a single interpretation—that last year it was the shire counties and the metropolitan counties in which the great elections of the spring of the following year were to be fought. The Labour strongholds there were put at risk, and therefore unemployment, which was the more important the further one went away from London, was fed into the rate support grant calculation. This year, in the spring elections in the London boroughs, unemployment will not be of the same significance; therefore this factor has been conveniently removed. In the London boroughs in which the Labour marginal constituencies are at risk it is not such an important factor as it was in the shire counties last year.
I have heard of marginal accountancy, but I had never heard of marginal constituency accoutnancy until the Secre-

tary of State introduced it into these rate support grant calculations. It is necessary for the Secretary of State, who now has responsibility, to bring up to date the basic information upon which calculations are made. The facts are clearly understood. He should now make clear the implications that follow changing any of the ingredients in the initial calculation so that the House can understand what the effects will be, comparing one area from another, of the political judgments which have to be made.
All this should happen in advance of the settlement of the rate support grant so that the House can make an informed judgment before arbitrary decisions are reached behind closed doors. Until that happens, the suspicion will remain that there is only one consistent factor running through the rate support grant settlement in each year and how the Secretary of State makes it—which is, sadly, the political expediency of the Labour Party.

5.21 p.m.

Mr. Cledwyn Hughes: The hon. Member for Henley (Mr. Heseltine) will forgive me if I do not immediately take up any of the detailed matters that he raised. I shall touch on some of them as I proceed with my own remarks. I wish to deal more specifically with these orders as they affect the county of Gwynedd, which includes Anglesey, the constituency which I represent.
I am glad to understand that my hon. Friend the Under-Secretary is to wind up this debate and will, therefore, have the opportunity to remove some of the undoubted apprehensions which my constituents and I feel about the possible effect of these orders. Anyone who seeks to read and to understand the orders must realise at once that we are dealing with difficult and complex matters. There can be no argument about this.
I received a letter, for example, from the Welsh Counties Committee on 7th November criticising the
present method of distribution of the rate support grant needs element (regression analysis) as being so obscure and complex that it is difficult to pin down exactly how the results are achieved.
The Welsh Counties Committee argues that a more simple method should be established under which grant is paid


according to certain basic factors such as the number of people in an authority's area, such as schoolchildren, for example, who require local authority services.
I tend to disagree with my right hon. Friend the Secretary of State, who does not think that that would be a satisfactory alternative criterion. But if this formula cannot be introduced this year, the Welsh Counties Committee says that the authorities' share of the needs grant should be frozen at the 1977–78 pattern of distribution. I hope that my right hon. Friends can be persuaded to look again at the serious position which is developing in counties such as Gwynedd.
We have accepted, and local authorities have agreed, that some financial discipline has been very necessary over the last few years. But I think that we are now being asked to bear more than our fair share of the misery. The total share of local authority expenditure borne by the Exchequer is to remain the same in 1978–79 as it is in the current year, which is to say, 61 per cent. As my right hon. Friend has pointed out already, a much bigger share of the same overall sum is to go to London. This necessarily means less for other authorities. I understand fully the attitude of many of my right hon. and hon. Friends who represent London constituencies, but I ask them to look at our problems with a good deal more sympathy, because they are very real ones.
The first impression that I had was that the effect of the changes would not be too harsh, with a gain to London of 0·6 of a penny rate, to the metropolitan counties a gain of 0·4p, and to the shire counties a loss of 0·4 of a penny rate. My right hon. Friend referred to the "safety net". I was given to understand that the new "safety net" device would protect us from too drastic a fall. My right hon. Friend said on 18th November to the Consultative Council on Local Government Finance that we could assume that
No single authority would lose a greater amount in needs element as a result of the 1978–79 rate support grant arrangements than would be equivalent to a 2p rate poundage
That is the position as I understood it. My right hon. Friend gave me the impression this afternoon that he was modifying this to some extent.
We in Gwynedd thought that we would benefit from this protective device. It is on this that we need some clarification from my hon. Friend the Under-Secretary of State for Wales. It has now been calculated that there will be a gain to London of 5·3 of a penny rate and a loss to the shire counties of 1·5p. In these circumstances our loss in Gwynedd will be 2·5p, which is considerable.
I am told that the consequences in cash terms are that Gwynedd will receive about £1¾ million less next year than it would have done on last year's formula. In a county of comparative poverty and high unemployment, this is a substantial loss.
I remind the House that the level of personal incomes in Gwynedd is the lowest of any area in England and Wales.

Mr. George Cunningham: So are the rates.

Mr. Hughes: I have the good fortune of having to stay in London for some part of the year when this House is sitting. If my hon. Friends had the good fortune to spend an equivalent time in Anglesey, they would take a very different view. I am in a position to see both sides of this argument. Some hon. Gentlemen seem to be blinkered to the London scene alone. If my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) represented Anglesey or a comparable Scottish constituency, he would be singing a different tune today.

Mr. George Cunningham: Of course we all defend our own areas, and it is absolutely right that we should do so. But so that we get not a London point or an Anglesey point right but a comparison between the two, does my right hon. Friend agree that in Anglesey the average cash payment for each domestic ratepayer this year is £65, which is one-third of the London average?

Mr. Hughes: I shall make a number of comparisons later which will help my hon. Friend to see the position more clearly. But I was at that moment dealing with the level of personal income in the Gwynedd area. The House must appreciate that this level has a significant effect on the number of free school meals, free domestic help and other services which I find provided without question in areas such as Greater London and without the same kind of financial difficult


that we experience. I accept fully that there are acute difficulties in some parts of London and in inner urban areas.
I am happy to support any measures which the Government and the House propose to deal with them. But there would be only one justification for this policy which my right hon. Friend is now pursuing and that would be that the problems and hardships of the London area are much greater than those in my area of Gwynedd. Please bear in mind what we have already heard about the "safety net". We were certainly prepared to bear some sacrifice, but there are factors operating in our area which are beyond our control.
Let me give some examples of these. First, we have a large influx of holidaymakers in the summer, which greatly increases our population over a period of three or four months. Second, we have to pay more than the average for materials and commodities, mainly on account of transportation costs from the centres of production. Third, there are the geographical factors. We have a long coastline and much mountainous terrain. No county in England and Wales has such a formidable combination of both. Fourth, because of the retirement of many people to parts of the county along the North Wales coast, places such as Llandudno, Llanfairfechan and the Anglesey resorts, we have a high ratio of elderly people. Fifth, our population is sparse. The acreage per head is 4·3. The needs distribution formula, however, takes no account of the first four factors I have mentioned. As for sparsity, we think that the sparsity grant is inadequate to meet the needs of an area such as ours.
I wish to refer briefly to the regression analysis method which has been mentioned by my right hon. Friend and by other hon. Members. It does not ensure an equitable distribution of the needs grant. It penalises those authorities that have done the Government's bidding and striven for efficiency and economy. In Gwynedd the population is only 225,000. It is a large area yet the effective product of a penny rate is less than £200,000. Taking all of this into account, it has been very hard going for us. We are not a big spender but we are a big sufferer under this developing policy.
I make a plea that the Government should look again at the present method, which is pretty well discredited. The various data used are out of date. I am sure that the Government would not wish to operate deliberately against the rural areas in favour of the urban areas. In this context I reject most emphatically the blatant political point made by the hon. Member for Henley. I believe also that the formula needs reappraising urgently.
The Government are operating an overall standstill for local authority spending in 1978–79. So be it. But this should be followed by a sharing of the needs grant pro rata to the 1977–78 distribution. It would not give Gwynedd a completely fair deal, but it would help to safeguard our present position and save our ratepayers from the extra burden of the £11 million being used to assist areas which are—this is their good fortune—much wealthier than ours. I am deeply concerned about the consequences for Gwynedd if action along the lines proposed is taken. I ask the Government most sincerely to heed my appeal.

5.45 p.m.

Sir Derek Walker-Smith: The right hon. Member for Anglesey (Mr. Hughes) has made some telling points in a clear and cogent way. I shall resist any temptation to follow him in an excursion to Anglesey, agreeable though I believe it to be. Last year, in the corresponding debate, I criticised the Government for what I called:
the clumsiness of their chosen methods and the unfairness and the illogicality that will result.
I went on to say:
Hopefully, by the time we consider these matters next autumn, other Ministers will occupy the Treasury Bench. But if, unfortunately, the present Government are still in office, I trust it is not too much to hope that they will by then have learned from their mistakes and profited from the constructive criticism that we seek to make.
It is appropriate now to ask whether the Government have learned from their mistakes. In fairness, one must say that they have at least appreciated and acknowledged a degree of imperfection and inequity in their previous arrangements. The Secretary of State has kindly accepted an invitation from my hon. Friend the Member for Hertfordshire,


South-West (Mr. Dodsworth), who has worked untiringly, and to good effect in this matter, to receive a Hertfordshire deputation in January to discuss the considerations arising in respect of the 1979–80 settlement, assuming that it is he who will be shaping its pattern. For that we are genuinely grateful.
The Government have even, primarily by their introduction of the safety net, sought to mitigate some of the most flagrant and hurtful injustices and for that, too, we must be grateful. That having been said, it is a case of being thankful for small mercies, because many aspects of the basic inequity and illogicality still remain. The indictment of the Government is two-fold. First, the formulae which are applied have been found to lead inescapably to inequity. Second, the opportunity, after full warning and many representations, to introduce appropriate mitigating measures, or still better to review and revise the whole system with a view to its rationalisation and improvement, has been missed.
The Government said that a safety net would be provided to prevent losses, in respect of the needs element, of grant which exceed a 2p rate. This assurance brought some comfort to hard-pressed ratepayers and councils, but it has turned out to be cold comfort, because the figure of 2p in many cases has been only a theoretical maximum which, in practice, has been exceeded, certainly in the case of Hertfordshire.
The efficacy and value of a safety net depend on the tightness of its structure. The Government's structure was not tightly drawn, partly or primarily because the method of calculating the base for the net ensures that additional grant is given to London before the safety net begins to operate for the benefit of others. The result, in the case of Hertfordshire, has been that a loss will be incurred in 1978–79 almost double the theoretical maximum, that is, there will be almost a 4p additional rate burden as against a 2p figure which was said, wrongly, to be the maximum increased burden beyond which the safety net would protect counties such as Hertfordshire.
Nor, as I understand it, is this level of loss exceptional. In her letter to the Secretary of State of 1st December, the Chairman of the Executive Council of

the Association of County Councils said:
We take the view that any authority has lost grant if its 1978–79 grant entitlement has risen by less than the overall average increase in the grant. In other words, any authority whose grant rises in cash terms by less than 7·3 per cent. is losing … Using this as our basis, we calculate that many authorities will suffer losses of more than a 2p rate, ranging up to over 4p.
It may sound Gilbertian to say that an authority has lost grant if its monetary receipt has numerically increased. That is not so in an inflationary age. We live in a Gilbertian situation because of the perpetual and unwelcome necessity to discount for inflation.
The shire counties as a whole are being forced to continue in a pattern of accumulating loss which has established itself over the past few years. They have suffered successive reductions in their share of the needs element of grant ever since 1974–75 with a fall of 16 per cent. over five years. Certainly the decline of Hertfordshire conforms to these figures. In the years 1973–74 to 1977–78 our receipts in Hertfordshire, as a proportion of the national total, decline from 2·12 per cent. to 1·75 per cent.—a percentage decline very close to the 16 per cent. for the counties overall. Projecting this forward to 1978–79, the Hertfordshire total needs grant loss, compared with the share received last year, is likely to be more than £6 million, rather than the £3·3 million implied by the safety net. This is a loss of almost 4p rather than the 2p rate put forward.

Mr. Molloy: rose—

Sir D. Walker-Smith: I should like to give way, but I shall follow the good example set by the right hon. Member for Anglesey.

Mr. Molloy: He gave way.

Sir D. Walker-Smith: If I may say so with great affection, the right hon. Member for Anglesey rather reflected the general conduct of the party to which he belongs—he said he would not give way and then he did. Regretfully, I shall not give way, because I shall reflect the normal pattern of conduct of my party and do what I say I will do.
Althought the concept of a needs element is well intentioned and is based on the reasonable desire to relate the


grant received to the services required, it is based on a fluctuating formula resulting over the years in progressively less grant being paid to Hertfordshire and the shire counties in general because of distribution elsewhere. The shift has been largely to the metropolitan areas whose needs, the Government argue, are greater.
There is a considerable degree of inequity attached to the distribution of grant, which arises from a fallacy that the Government have accepted without proper and sufficient scrutiny. That fallacy is that domestic rate payments in the large conurbations, particularly London, are much higher than those in the rest of the country. As a generalisation it might seem prima facie to have some substance—

Mr. Molloy: It is true.

Sir D. Walker-Smith: It may well be true, but I am not so dogmatic in my propositions as the hon. Member for Ealing, North (Mr. Molloy). I like to have very good evidence for any proposition that I put forward, as becomes a member of my profession. The hon. Member might do well to do the same.
However, that assumption about higher rates in the conurbations does not always apply. It certainly does not apply in Hertfordshire, where rateable values are high and rate payments are also high in respect both of comparable hereditaments elsewhere and of the value and quality of the services obtained.
For example, residents in Hackney or Islington in 1973–74 paid about £20 more a year in rates than they would have done had they been living in similar houses in Stevenage or Oxhey. By 1977–78 the position was almost exactly reversed. The rate payments in Stevenage and Oxhey were £20 a year higher than for comparable premises in Hackney or Islington.
The average domestic rate payment in Hertfordshire in 1977–78 was approximately £13 a year more than the average in London. In 1978–79 the formula changes will virtually double that difference, representing a total of £7 million more to be paid by ratepayers resident in Hertfordshire compared with what they would pay if they were resident in

London. For 1978–79 the difference between the positions of Stevenage and Oxhey on the one hand and Hackney and Islington on the other probably will rise from £20 a year to between £50 and £60 a year.
Hertfordshire receives a low level of resources element simply because rateable values in the area are high, and consequently domestic rate payments are high. All this constitutes a continuance and accentuation of the inequity to which I referred last year in these terms:
The principle is clear—there should be parity of treatment. Comparable hereditaments should be rated alike, which indeed, as I understand it, was the object of the switch from local to central valuation under the Local Government Act 1948. On the contrary, however, there is disparity and inequity from which my constituents and the ratepayers of Hertfordshire generally suffer."—[Official Report, 2nd December 1976; Vol. 923, c. 776–9.].
The overall result is that Hertfordshire and any other counties similarly placed suffer a double disadvantage and a cumulative injustice. First they receive an unduly low receipt of grant under the resources element because of high rateable values and, secondly, they suffer a reduction in the needs element of grant despite a national increase of 9 per cent. to cover inflation. The consequence of this is that the burden of inflation will have to be covered by rate increases or a reduction in services. Either course is unwelcome and is heaping Pelion on Ossa as far as my constituents are concerned.
Many of my constituents have not only high rateable values and high rate payments but, as commuters, they have high rail fares, which are about to go even higher and in respect of which the Chancellor of the Exchequer consistently refuses to grant tax relief as a necessary expense for work.
Now my constituents will face a further reduction in services if rate increases are to be kept within tolerable limits. While large urban areas like London, which receive more grant, will spend more on services—that is the clear expectation and perhaps the implied exhortation in the Secretary of State's statement of 18th November—the counties, which will be the losers of grant, will spend less. This will constitute an aggravation of a process from which they are already suffering.
For example, I have just received from the county education officer a letter about the provision of transport to secondary schools from Sawbridgeworth to Bishop's Stortford Boys High School. He says:
Thank you for the your letter about transport from Sawbridgeworth to Bishop's Stortford Boys High School.
You will know the difficulties which the County Council have had over the last five years as a result of loss of rate support grant and indeed I know that you have been yourself actively involved in representing the views of the County in this matter. One of the economies which have had to be made as a result of these losses is in the provision of transport to secondary schools.
I quote this particularly because of its topicality, but it is only one example.
There are a variety of services that may be prejudicially affected, such as old people's homes, nursery schools and services for the mentally handicapped, which are so indispensable and important, to name only a few.
Although the Government have tried to improve things and they have arrived at a position that is rather less bad than some people apprehended, nevertheless the situation is basically unsatisfactory and will remain unsatisfactory and unjust until the Government resolve to review and revise their formulae in such a way as to relieve the counties of the unequal and unmerited burden imposed upon their ratepayers.
At the end of the day it may be that, having regard to this position, some of my right hon. and hon. Friends may feel that it is necessary to record their dissatisfaction in the Division Lobbies. I understand from inquiries that I have made that I am not allowed properly to vote today because I am notionally in Strasbourg. However, I thought that I could serve my constituents better by being here to speak on the rate support grant. I am, in the inelegant idiom of the Whips' Office, part of a "block pair". I shall not be guilty of a breach of faith to the prejudice of an hon. Member opposite who is physically in Strasbourg—but if the Division takes place I hope that my right hon. and hon. Friends will understand that, although my feet will not go through the Lobby with them, my heart certainly will.

Mr. Deputy Speaker: I wish to remind the House that even if the debate lasts its full length until 11.30 p.m., it will be

impossible, unless we have some drastic brevity, to accommodate more than a fraction of the number of Members who wish to take part in this debate.

Mr. John Wells: On a point of order, Mr. Deputy Speaker. If the debate goes the full time until 11.30 this evening, does it mean that the two Social Security Orders, the Church of England (General Synod) Measure and the House of Commons (Services) motion automatically fall?

Mr. Deputy Speaker: No. The orders to which the hon. Gentleman refers last for one-and-a-half hours after the time at which they have been entered upon.

5.52 p.m.

Mr. John Forrester: The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) has given another example of his detailed knowledge of this subject, but, in response to the appeal from the Chair, I shall not follow what he said about the presence of hon. Members in Strasbourg, although a visit there may be very pleasant, indeed.
The hon. Member for Henley (Mr. Heseltine) failed to convince the Labour Benches that if he were now sitting on the Government Benches he would deliver anything but misery. He confirmed that the only thing we can expect from the Tories is equal shares of misery, if nothing else. The right hon. and learned Member for Hertfordshire, East said that the Conservatives carry out their promises to the letter, but I shall not proceed on that line of argument.
I welcome the fact that my right hon. Friend the Secretary of State for the Environment made concessions on four-year damping and also made the right noises about cash limits. We hope that this will cover points regarding wage settlements, education costs and all the rest of it. We in Staffordshire asked the Department to examine grants-in-aid for employment, because Staffordshire's unemployed were going over the border and signing on in county boroughs. In that way they were receiving more money than that to which they were entitled. However, we are grateful for small mercies and look forward to more concessions from the Government. I hope that my right hon. Friend will be making


announcements on the lines of suggestions which we have put to him for consideration.
There is a continuing dismay in the shire counties at the shift of resources to the larger conurbations. There are considerable hard feelings, especially in areas which contain large cities within their boundaries. If my right hon. Friend intends to bring in legislation in the near future to shift power back to the large cities, perhaps that bone of contention will remain with us for a great deal longer. We in Staffordshire recognise that there are great problems in the inner cities, but we think these should be regarded as special projects outside rate support grant. We believe that all areas with such problems should be treated similarly and should not be subject to the present disparities.
I welcome the Bill published today which will deal with the problems of inner cities, and I hope that its provisions will go far enough to solve their problems. Unless there is a new approach to the allocation of industrial development certificates, it seems to me that we shall never achieve our targets by tampering with the rate support grant. We all hope to see a regeneration of urban areas, but with ever-increasing costs and diminishing public transport services, we must still take account of the fact that many people wish to live near their work, and, indeed, need to do so. Therefore, we need to relate the needs of people who go to work with the needs for homes in the inner city areas, and we must have the means to achieve that end.
In some structure plans the Secretary of State has been urging development away from green field sites—and this is happening in North Staffordshire—in order to bring about regeneration and new industry in the inner city cores. We support this commendable development, but we hope that the Government will be able to provide the extra resources that will be necessary if that is to be done. If the Government in their wisdom direct local authorities to change structure plans, the Government should provide the resources to achieve those objectives.
We are concerned in Staffordshire that the formulae of the needs element and its distribution leave something to be

desired. It has been repeatedly pointed out that the percentage of this element in the shire counties has fallen in the last few years. This does not lead to good housekeeping. If we encourage local authorities to spend and spend again and then a few years later deny them the cash to maintain their ambitions, problems are bound to arise. That is a fault displayed by both major parties. However, I am not accusing my right hon. Friend the Secretary of State for the Environment of encouraging irresponsible expenditure in that respect. Certainly the right hon. Member for Leeds, North-East (Sir K. Joseph) has seen the error of his ways and repented. If local authorities were led to believe that a new Jerusalem were round the corner, one can now understand their dismay when they are unable to keep that idea glowing.
Councillors appear to have a touching faith in their Whitehall masters. Perhaps they should be more prudent, but certainly the needs element has shifted away from the shire counties towards London The percentage share of needs element in the shire counties has fallen by 16 per cent., while that in London has risen by 54 per cent. in the past few years. Although the needs element in relation to rate support grant has risen by 7·3 per cent., the figure in London has risen by 20·4 per cent. The shire counties as a whole have increased their figures by 3·5 per cent., and the figure in Staffordshire is up by only 3·2 per cent. That does not make for happiness in Staffordshire.

Mr. George Cunningham: Nevertheless, is it not true that the average domestic rate payment in Stoke-on-Trent is only £97 a year, whereas in London the average figure is £160.

Mr. Gwilym Roberts: They are smaller houses.

Mr. Forrester: I do not know whether my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) has a reference book with him or a computer brain that enables him to carry the differences in his head, but I shall come to that point in a moment.
What makes the situation even more difficult is the confusion in the figures between the Department of the Environment and the Association of County Councils. It would help mere mortals


like me—although not perhaps my hon. Friend the Member for Islington, South and Finsbury—if the two major parties could get together and produce the right figures so that we may all have a realistic assessment of the position.
Confidence is not restored when we are told that all this is handled by regression analysis. When one asks what that analysis is, one is told by the Department that it is virtually an authorised rake's progress. If that means that the more one spends, the more one succeeds with the Department of the Environment, I am beginning to wonder why there have been so many calls for economy. That does not seem to match up with the actions which have been taken.

Mr. Gwilym Roberts: Since my hon. Friend has mentioned regression analysis, does he not agree that there is a strange type of calculation put forward by the Department in respect of single-parent families, who are given a high weighting in the formula? Does he not share my surprise that when I query these matters I am told that there is a high correlation with a group of other needs factors? Does he not agree that such a correlation is spurious?

Mr. Forrester: If I go on answering such matters, the Chair will chastise me for taking too long in my remarks. I shall not argue with my hon. Friend, who is one of that select band who belong to the Statistical Association.
If the extra money that is going to London will generate future expenditure, and if the other authorities have to slim their spending in order to avoid large rate increases, on the basis of our old friend the regression analysis this could end up with the London percentage going through the roof of the graph and the other poor areas slipping down to the trap-door at the bottom.
The point has already been made about how one can have confidence in the figures of the 1971 census that are so widely used in the calculations and believe that they are relevant in 1978–79. While the Secretary of State said that the simple formula that had been put forward did not seem to be the answer, at least one would have thought that we could arrive at a much simpler formula

to make these calculations that would give us up-to-date figures and projections.
Last year Staffordshire imposed a 25 per cent. rate increase. There may be too much pre-Christmas pessimism in speculating on what the increase will be this time but it must be substantial and I cannot imagine that it will be less than 10 per cent. Like most county councils, Staffordshire is having to cut services to keep within limits—sometimes cuts in services that will inflict burdens on district councils. I hope that the Minister will take account of that point.
The county council is in the process of removing a large number of amenity sites to save money, which will no doubt mean that there will be considerable increases in dumping, and in order to maintain the environment somebody must pay to have that rubbish collected. The economy may be a false one, because someone still has to pick up the rubbish.
I have been challenged by the hon. Member for Islington, South and Finsbury who says that Londoners pay more in rates. I pay rates in both London and Staffordshire and I would not necessarily argue with him on that point. However, the disparities in the rates are reflected in wages in different parts of the country and therefore for many occupations in London there is a London allowance that I had thought was intended to cover the differences in the cost of living for those in London.

Mr. Cunningham: It is not 50 per cent.

Mr. Forrester: A £300-a-year London allowance still leaves a bit to spare for other extras in the cost of living in London. It seems reasonable that if the rates differential is to be abolished the London wage allowances should be reduced at some stage to counteract what Londoners do not have to pay out in extra rates.
I accept that the Secretary of State has an impossible job in trying to satisfy everyone. However, such is the magnitude of the problems in the inner cities that we are only scratching the surface with the rate support grant. Urban decay and renewal will be with us for as long as man continues to live in large communities. Crime, vandalism and hooliganism may all be products of living


in large towns and cities. The message that I want the Minister to understand is that outside London and the favoured conurbations these problems exist in just the same way. We ask the Government to recognise that misery and deprivation are just the same whether in London, Staffordshire, the West Midlands or, dare I say it, West Lothian.

6.5 p.m.

Mr. John Stanley: The Secretary of State claimed in his statement that the rate support grant settlement was "fair and not unfavourable". I regard it as far from fair and thoroughly unfavourable, because it is of most help to London constituencies. I must agree with my hon. Friend the Member for Henley (Mr. Heseltine) that this is perhaps not unrelated to the fact that there will be London elections in the spring. Certainly during the past three years there has been a substantial switch of resources away from shire counties and into the metropolitan areas and for the fourth year we are now going to suffer the same loss.
The justification for this that has been put forward year after year is increasingly difficult to uphold. It is that the urban areas, particularly London, have much greater needs, but, as the hon. Member for Stoke-on-Trent, North (Mr. Forrester) said, it is about time that we began to recognise that the non-metropolitan areas also have great financial needs and that, in some cases, the non-metropolitan areas have needs in excess of those of the metropolitan areas.
For example, the Government have not begun to reflect at all the fact that the non-metropolitan areas are suffering from major population expansion. In spite of what the Secretary of State has said, the per capita element is simply not being sufficiently reflected financially in the needs element of the rate support grant. I do not believe that the Government are sufficiently reflecting the fact that it is inherently more expensive in many cases to administer and to provide services for an extended geographical area than to carry out the same operations in the compact areas of a city.
In particular, the Government have not begun to recognise the enormous finan-

cial implication of providing a system of public transport in an extended geographical area that can begin to match the systems that can be provided in compact city areas. In short, we have substantial financial problems in the shire counties and we do not believe that it is right that we should go on being deprived of resources.
It is particularly difficult for us because this is not the first year that we are facing a prospective loss. In Kent, during the past three years we have suffered a loss of £25 million, and that is a massive amount of resources to lose. I can give the House illustrations of what this has meant. With schools we have had to suffer a loss in terms of expenditure on books, stationery and apparatus to the value of £2·8 million. We suffered a loss on book purchasing for our libraries of £133,000. In the social services, we have had to close seven residential homes. We have had to cut police overtime to make savings of about £500,000. Even in the streets we have had to make substantial cuts in lighting and to make some £200,000 of savings in that way. The Government will not therefore be surprised to learn that there is great feeling among hon. Members on both sides of the House who represent the shire counties and that, having suffered such cuts during the past three years, we face the prospect of further cuts for a fourth year with alarm and dismay.
The greatest difficulty of all is to try to combine cuts with the expansion of those areas that are facing substantial population increases. That is the case in many Kent constituencies where, as in many areas on the perimeter of Greater London, we are facing continuous population expansion. In Kent, during the past three years alone the population has grown by 56,000. We have had to accommodate an additional 8,000 schoolchildren. In that time we have had the equivalent of half an additional parliamentary constituency accommodated in the county. Every one of those schoolchildren generates additional pressure on resources. We need classrooms, teachers and equipment. It seems to be extraordinarily unfair and unjust that such counties should face additional pressure on expenditure as a result of the population growth and at the same time face the greatest reductions in the amount that


they receive through the rate support grant.
If I may be slightly parochial, the contradictory nature of the policy is starkly shown in my constituency, part of which is in a medium-growth area. I wonder whether the Secretary of State is familiar with the village of Leybourne. He looks as though he does not know it. I am sorry about that, because he is in the process of destroying it. He has given planning consent on appeal to build an additional 1,000 houses in a little hamlet of about 150 or 200 houses—in the name of growth. He has approved another major development in the village of Hilden-borough with a massive sand and gravel development on the edge of the village—in the name of growth.
There is a wholly contradictory position within the Department of the Environment. Its right hand is giving sanction on appeal to development applications which are opposed locally and that development has been going ahead as a result of the Secretary of State's planning consents, but the left hand of the Department is reducing the amount of rate support grant available to us and is thus making certain that when the growth comes we shall not be able to provide the proper level of local government services.

Mr. Molloy: Will the hon. Gentleman give way?

Mr. Stanley: I hope that the hon. Gentleman will not mind, but I shall not give way. There are a number of hon. Members who wish to speak and I shall be brief.
The Government claim that the loss of rate support grant is limited to the equivalent of a 2p rate. Having listened carefully to the Secretary of State, it seemed clear to me that he was not disputing the figures put forward by the Association of County Councils but was merely saying that they were put forward on a different basis. Everything that the right hon. Gentleman said confirms that there is no firm safety net at the 2p equivalent, that the safety net has an enormous hole in it, that the ACC figures are correct and that those counties that claim that they will be losing needs element in excess of a 2p rate poundage will suffer exactly that loss.
Our calculations in Kent are that we shall lose the equivalent of a 3·1p rate next year. That represents a total loss of £7·9 million. The 2p safety net is not a safety net at all. The nine shire counties which are prospectively suffering losses in excess of 2p—Cambridgeshire, Essex, Kent, Northamptonshire, Warwickshire, West Sussex, Wiltshire, Hertfordshire and Northumberland—will be suffering a loss in excess of a 2p rate. It is highly misleading for the Secretary of State to give the impression, perhaps unwittingly, that he has created a firm safety net equivalent to the loss of a 2p rate.
The suggestion that it should be possible for all county councils to contain their domestic rate increases to single figures is wholly unrealistic in respect of many counties. We have been doing our calculations in Kent and we reckon that to make up the £7·9 million loss would mean an increase in domestic rates of 14 per cent. next year. So much for single figures.
We do not complain that cuts have taken place over the last few years. They were inevitable after the highly irresponsible economic policies pursued in 1974–75. We complain that, although we are prepared to take our fair share of the burden in the shire counties, we are not prepared to take more than our fair share. We are not prepared to see our school-children being deprived of books and apparatus when no such deprivation is being suffered elsewhere. We do not see why we should take our police off the beat in order to save on overtime when this is not happening elsewhere. We see no reason for our councillors to go round and round the treadmill of trying to establish satisfactory local government services for an ever-growing population with ever-reducing financial resources.
We are not prepared to suffer a fourth year of continuing discrimination against us. Because this appears to be the clear intention of the Government, I shall be voting against the orders.

6.15 p.m.

Mr. David Stoddart: We have received a good many figures and I do not intend to bandy figures around, but I support the plea of my hon. Friend the Member for Stoke-on-Trent, North (Mr. Forrester) for the Secretary of State


to help hon. Members during the next few days by putting out his own estimates of what he thinks the effect of these orders will be.
I represent a constituency that is in a shire county. I understand and sympathise about the desperate problems of inner city areas which have been allowed to run down over a long period. We must all be concerned about the urban wastelands where people feel frustrated, ignored and isolated from the mainstream of humanity. It is a problem that has to be dealt with, and I therefore support all the measures that the Government are taking to tackle and solve these problems. However, they must beware of ignoring the facts of rural deprivation in the meantime.
These facts must be taken into account. For example, there is much bad housing in rural areas. We should not imagine that, because a cottage has a thatched roof and looks very nice, it is a good place to live in. That is not necessarily so. There is bad housing in rural areas as well as in urban areas.
There are also grave transportation difficulties. The costs of transport in rural areas are high. I represent a constituency that is part of the Thamesdown district. We have seen recently that fares in the urban part of the area are only half the level of those in the rural area. There are questions of cost as well as of the level of transport services.
People living in rural areas are isolated from shopping facilities and services. This deprivation is not suffered by people living in urban areas. In addition, in many cases the public services on which people in rural areas have a call are at a relatively low level. Let us take, for example, the situation in the South-West. The region has the lowest but one wage levels in the country. They may even be the lowest, because the South-West and East Anglia are always competing in this respect. In addition to being almost the lowest-paid region, in many cases we also have a low level of local authority services. In that respect people are losing both ways; they are getting neither high wages nor the services which, in part, would make up for the lack of high wages.
Consider the position of my county of Wiltshire. Its social services expenditure

is at the bottom of the league table. To make it up would cost £717,000. The result is that £200,000 a year less than the national average is being spent on children in care, while £166,000 less than the national average is spent on residential care for the elderly.
For the current year, the Wiltshire County Council made cuts of over £1 million in education expenditure. This has resulted in the deprivation of schooling and activities in Wiltshire and my constituency. This year, despite my right hon. Friend's statement that he was not looking for cuts in expenditure, the county council intends, apparently, although I hope that it will have second and, if necessary, even third thoughts, to cut education expenditure by a further £834,000 in 1978–79. That will mean even further deprivation for the children in my constituency and in other constituencies throughout the county.

Mr. Charles Morrison: Does not the hon. Gentleman agree that even if the county council has to undertake these cuts a very considerable increase in the rates will still be involved?

Mr. Stoddart: That is a matter of conjecture. This is where I take issue with the county council. It announces that there will be cuts of £834,000 in education expenditure at the same time that it announces that it will be putting £2 million to balance. The two things do not tie up.

Mr. Charles Morrison: indicated dissent.

Mr. Stoddart: It is no good the hon. Gentleman shaking his head. That is the fact, and he knows it. He cannot have it both ways. On the one hand, the county council is to put £2 million into balance and, on the other, it says that education expenditure must be cut by a further £834,000. That is not accepted by my electorate, or by the hon. Gentleman's electorate, or by any of the electorate throughout Wiltshire. I do not wish to be unkind to the county council, but I hope that it will have further thoughts about these additional cuts.
It can be argued with justice that this situation and these cuts have not happened merely over the last two or three years, although that is the charge that


the Opposition seek to hang on my right hon. Friend. It is not so. The shire counties, including Wiltshire, have held the social services at a low level over a long period—indeed, for decades—so one cannot merely say that the low level of services in the rural areas is a 11 my right hon. Friend's fault. It is not so. Indeed, the shire counties may be said to be suffering because of their own failure in the past to make progress and to spend sufficient money on their services. That is a factor that the shire counties ought to be considering.
Nevertheless, I have to say that the Government have a duty to try to raise standards in the rural areas. That cannot be achieved by continually weighting the rate support grant against the shire counties. I think that my right hon. Friend accepts that, and I hope that he will consider it. Unfortunately, the Labour Party tends to be thought of as an urban-oriented party. That is not so. We shall ignore the needs of the rural dwellers at our own long-term political peril.

Mr. Hugh Fraser: Hear, hear.

Mr. Stoddart: At its last annual conference, the Labour Party recognised that the needs of the rural areas must be studied and met. It is now up to the Government to give the question urgent attention, and I sincerely trust that they will do so.
My constituency, which is within a shire county, is an expanded town. As an expanded town it was supported and given encouragement by the Government. The expansion was a highly successful operation, which has been admired by many people throughout the country. But a town cannot expand and then suddenly stop expanding. It does not happen that way. One cannot say "So many, so much, and no further." Because the influx of population included a very high proportion of young people, self-generating expansion becomes built-in. For this reason house building has to continue at a high level, but with housing comes the demand for all the other associated services, such as education, health, highways, libraries, and social services.
Since these services depend on the willingness of the county council to provide them, the pace at which my constituency can deal with its ongoing pro-

blems of expansion depends on the county council, which in turn is dependent to a large extent on the support that it receives from the Government, although it has, through its own rateable value and the raising of the rates, a certain amount within its own hands.

Mr. Bruce Grocott: Does my hon. Friend agree that under the present system of local government finance expanding towns which undertook their expansion for the benefit of a region as a whole and not just for their own benefit have to reconvince their fellow district councils within the county area every year in order to get essential services, such as housing development?

Mr. Stoddart: I accept that. It is extremely difficult to be convincing about it. There is no doubt that other district councils feel that an expanded town is getting the lion's share and that they are doing badly. I understand the problem.
I believe that in this rate support grant settlement the Government have gone some way towards recognising some of these difficulties, but the question requires a good deal of further thought and research between now and next year's settlement. I sincerely hope that the Government will give that thought and do that research, and take into account the points that have been and will be raised in the debate.

6.28 p.m.

Mr. Hugh Fraser: I am sure that the thoughts that are going through the mind of the hon. Member for Swindon (Mr. Stoddart) about the political impact of the attitude of the Labour Party towards the rates will be carefully dealt with when the next General Election comes.
I want to follow the speech made by the hon. Member for Stoke-on-Trent, North (Mr. Forrester), who is one of my colleagues in North Staffordshire. I hope that the Under-Secretary of State will carefully weigh up the hon. Gentleman's statement that the question of urban deprivation cannot be dealt with by rates collected from other parts of the community. This is clearly shown by the figures already quoted, demonstrating that under both Governments the share of the shire counties has fallen from about 62 per cent. in 1973 to 51 per cent. in 1978.


If this process goes on, as the hon. Member for Stoke-on-Trent, North pointed out, it will often be simply throwing good money after bad. In London, with all the help that it receives, the share has gone up to nearly 64 per cent. in this period.
Staffordshire is as badly treated as any county council by the Government. In fact, we are worse off than any other on percentage grounds. We shall be receiving about £2 million more this year in cash on a budget running to well over £200 million, with the cost of inflation alone running at about £14 million—that is, if we accept the 10 per cent. wage norm laid down by the Government. I think that the inflation rate of 6·9 per cent. contained in the Government statement is a bit of Cloud-cuckoo land. Assuming an inflation rate of 10 per cent., this means that we shall either have to cut services or increase rates, probably—although all budgets have not been worked out yet—by around 20 per cent. in the coming year.

Mr. George Cunningham: What level of average cash payment does the average domestic ratepayer in Staffordshire pay compared with the London figure of £160?

Mr. Fraser: The people of Staffordshire are not rich like people in London. Londoners are rich and get special allowances and sell their homes for £5 million. There is a great deal of talk about London being broke, but I have not seen as many Rolls-Royces in any other city in the world.

Mr. George Cunningham: What is the figure?

Mr. Fraser: The hon. Gentleman can work it out for himself. The point remains that in Staffordshire we are faced with a 20 per cent. increase in rates in the coming year. What the Secretary of State said about an average of 8 per cent., or well below 10 per cent., puts him almost in the class of the Chancellor of the Exchequer in terms of misleading the public. The public has been rather misled and people will be rightly angry. Nothing is more touchy than the question of rates. Rates are a forced cross-payment between a few in the community to the

community as a whole, but in addition the rate support grant is made up not only by Government beneficence but by taxpayers' money. That policy can be wasteful and hostile to the real interests of the shire counties—certainly to Staffordshire. The Government will have a reckoning coming to them. They should not forget that. I shall be pleased to inflict the maximum defeat on them.

Mr. George Cunningham: The figure is £118.

6.33 p.m.

Mr. Stan Crowther: In view of the lack of time, I shall not attempt to follow the speech of the right hon. Member for Stafford and Stone (Mr. Fraser). I used to think that I knew something about local government finance, but now I am wondering not only whether I know anything about it but whether anyone else does, either. If this set of results is derived from the best formula that can be found from a wide range of options, I am convinced that we are joining Alice in Wonderland.
My right hon. Friend the Secretary of State refered to a misunderstanding. I am sorry that he is not here to hear me say this, but that misunderstanding was largely due to his own speech, in which he said that no authority would lose more than 2p in the pound as a result of the change in this year's distribution compared with last year's. As a result, someone in the Department of the Environment had to send out a letter to the Association of County Councils saying that my right hon. Friend was talking not about last year's share but about last year's distribution arrangements. But my right hon. Friend did not say "distribution arrangements". He said "distribution", which created this completely false impression. He used the word "arrangement" today, so at least he has learned of the mistake that he made.
The Department of the Environment claims that my borough is losing an amount equal to 1·3p in the pound. In fact, our loss will amount to 2·5p—a total of well over £1 million. I hope that no one will have the impression that only the non-metropolitan counties are doing badly. Many metropolitan districts are doing badly as well, and this should be understood. The authorities are not interested in what they are hypothetically losing.


They are interested in what they are actually losing. That cannot be over-emphasised.
The County Councils Association is able to be forthright in its criticisms because all its members are losing something. The Association of Metropolitan Authorities has to adopt a rather more ambivalent position, because one section of its members is gaining at the expense of another. Frankly, the AMA does not know whether to laugh or cry, but I do, because where I live we are losing considerably, and I can see no justification whatever for the way in which many metropolitan districts with severe and well acknowledged urban problems are now being penalised to provide this great improvement for the London boroughs.
I may well be upsetting some of my hon. Friends when I say that, but it must be said. People less charitable than I am might be tempted to draw certain conclusions from the fact that the three Ministers principally concerned with local government all represent London constituencies. I attribute no such unworthy motive; I say that others might think that. But when the ratepayers of the country as a whole are subsidising London to the point at which 14·3 per cent. of the population will be getting 21·6 per cent. of the needs grant, it is time to draw the line.
I have no doubt that my hon. Friend the Member for Islington, South and Finsbury
(Mr. Cunningham) will jump in soon to ask how much people in Rotherham pay in rates. I have to tell him frankly that I do not know, but I do not doubt that it is less than people are paying in Islington, and the reason for that is that rateable values are so much higher in Islington, and those higher rateable values apply not only to houses but to shops, offices and factories, so that the total benefit from rateable value has to be taken into account. Let us be clear about that. [An HON. MEMBER: "Any factories there?"] There may not be a factory there, but in my area we have factories, and as a result of the presence of those factories we also have smoke pollution, which we have to deal with out of the rate fund.
I accept that there are problems in London. My goodness—we know that. Many of them are peculiar to the capital,

and many of them—or at least some—have been created or exacerbated by the policies adopted by the local authorities of London over the past 30 years.

Mr. Peter Hardy: Hear, hear.

Mr. Crowther: I thought that that might be contradicted, but apparently it is accepted. I am glad to hear that. Certainly London's problems were not created by the ratepayers of Rotherham, Sheffield or Doncaster.
Among the metropolitan districts themselves there is no consistency in this order. Frankly, it is nonsense that within the four districts of South Yorkshire, Sheffield, Rotherham and Doncaster are all losing and Barnsley is coming out better. Anyone who knows the area could not possibly conceive of any sensible set of criteria which would produce that result, which says that Barnsley's needs have increased and those of Sheffield, Rotherham and Doncaster have all become smaller. It is absolute nonsense.
Having got ourselves into the realms of comic opera through this incredibly complicated system, with its weighted factors and what is called damping—that is a silly word, anyway—and its alleged safety net, which nobody really believes in, making confusion worse confounded, we must recognise that it is time to scrap the whole thing and start again.
I look back with great nostalgia to the days before most specific grants were abolished and replaced by the general grant system. I have never understood why so many of my former colleagues in local government now joyfully embrace a system that they bitterly opposed when the Conservative Government introduced it at the beginning of the 1960s. At least specific grants mean that the authority that does the job actually gets the money, whereas the general grant does not. It is said that the general grant gives local authorities a lot more freedom. It gives them freedom to decide which service they will cut, and that is the only freedom that they have had in the past three years.
I suggest that the time has come for a radical reform of local government finance. We have had enough studies, inquiries and reports. It is time we started getting something done.
I accept that rates and grant—drastically reformed, I hope—would still form a large part of local government income, but the one thing that nobody is talking about any more is the abolition of the principle of ultra vires, which was strongly urged upon the Redcliffe-Maud Commission by the old Association of Municipal Corporations 10 years ago. There was only one dissenting voice, and I can tell anyone interested that that was the voice of Birmingham. Every other authority in the old AMC at that time voted in favour of abolishing the ultra vires principle.
I believe that if in the past local authorities had been free to engage in profitable commercial enterprises, many of the problems that they face today would have disappeared. I see no reason why a public authority should not be allowed to make money and why the profit-making should be confined to private enterprise. I agree that proper safeguards would have to be built into the accounting system, but the principle of allowing freedom to local authorities to take an active role in industry and commerce ought to be accepted.
From long experience I realise how frustrating are the restrictions that constrain people in local government. It is time to stop treating local authorities as though they were backward children needing to be fussed over, lectured and smacked from time to time to encourage good behaviour. They are responsible bodies and they should be treated as such. If they go wrong, the remedy is in the hands of the voters.

6.42 p.m.

Mr. Stephen Ross: I greatly enjoyed the speech of the hon. Member for Rotherham (Mr. Crowther), with the possible exception of his closing sentences. I have looked up the settlement for Rotherham, and I see that the hon. Gentleman is at least on the plus side of the paper. Rotherham has gone up 1·8 per cent., and that is something which a great many of the shire counties and such constituencies as mine have not managed to achieve under this settlement.
It will be no surprise to the Secretary of State to hear that I do not like this settlement one bit. I acknowledge his overall 61 per cent. I think that that was fair, and no one has criticised it. I shall

not criticise it today. I realise that there were pressures and suggestions at one time that the figure should go as low as 58 per cent., and I congratulate the right hon. Gentleman at least on sticking to the 61 per cent. and keeping in accord with what he fixed last year.
However, I entirely agree with the hon. Member for Rotherham in thinking that the regression analysis formula, which, regrettably, is still with us, is throwing up some substantial distortions. He referred to some of them, and there are others.
I understand some of the reasons for that. The Secretary of State dealt with the education point, and that, presumably, is why we see such wide variations in Bury and Oldham as well as in Rochdale—I may add, a fairly heavy variation there on the wrong side, in my view. But I should be interested to know why other factors have been left out this time.
I think that the hon. Member for Henley (Mr. Heseltine) referred to the unemployment factor. That is out this time. The factor for pensioners living alone has been dropped. Also, we have had a change in the sparsity factor. This affects such constituencies as that of my hon. and learned Friend the Member for Montgomery (Mr. Hooson), where, with a sparsity of 11½ acres per person, it has had a detrimental effect on the settlement for his county. No fewer than 20 counties will be worse off in real terms from the needs element than they were last year.
If one considers Cambridge, one realises that last year it had a shockingly bad settlement, and once again it is on the losing end. I do not see how county treasurers and officials can plan when they are going up and down in this way like a yo-yo.
The chief executive officer of Northumberland has written to say:
We expect to lose some £1·3 million in grant, equal to a rate of 2½p. But that is only part of the story. Our actual grant in cash terms is estimated at £24·3 million for 1978–79 compared with £24 million for the current year. The result is that we are effectively left to bear from the rate the full impact of inflation. On the basis of a budget providing for no growth, it is estimated that our rate will have to be increased by some 13p or 20 per cent.

Mr. Clement Freud: Does my hon. Friend admit that one of the


problems is that, by and large, county treasurers are more accurate in forecasting the extent of inflation than was the Chancellor of the Exchequer?

Mr. Ross: I think that that is the case, and the forecasts coming from county treasurers are, unfortunately, likely to be proved correct again.
I do not deny the claims of the inner urban areas, but I support the comments that have been made today on this side of the House that the pendulum has swung too far. We have today had published the Bill to provide help for the inner cities. This measure will provide for substantial loans and grants, and I support it, but, as has also been said, from both sides of the House, there are real problems of rural deprivation. The Secretary of State either has to provide more overall or a little less to London and, perhaps, some of the other urban areas. The ACC submission, whatever its faults—and they have not been spelt out—shows the need to change the formula to something which I and others called for last year.
Hon. Members will not be surprised if I deal now with my own constituency. I think that it is unique to represent a whole county. We have suffered continually from this regression analysis formula which was first introduced by the Conservative Administration in 1974. It has been a nightmare. Ever since we have suffered from that base. The settlement in 1974 was the most disastrous that we had had until this year. We went down, in money terms, from £7·675 million in 1974–75 to £6·735 million. I was chairman of our policy resources committee at the time, and I had to bring in a budget which many will remember had to come in very late because we did not know the figure until well into the new year.
I listened with interest to the hon. Member for Henley, whose concern for our troubles I warmly welcome and have been reading about in my local Press. I am sure that it has nothing to do with the political situation in my constituency. I had hoped that the hon. Gentleman would offer rather more than a promise to look at our difficulties should he come to office. I have to tell him that promises of that sort have been made to my constituents and to my local authority since 1964. They have been made even by the present Administration. The Secretary of

State and his Under-Secretary of State have seen two deputations this year from my county, one in February and another in the autumn. We have presented an almost unanswerable case, but so far we have failed to convince the boffins who work out this formula for us.
If the hon. Member for Henley comes to office, he will have to be firm with the professionals, some of whom are in the Box at the end of the Chamber, if he is to achieve a special factor for our severance problem. I welcome the hon. Gentleman's suggestion for a more open approach to the construction and distribution of rate support grant, but I was surprised that he had no comment to make about what the Conservative Party would do about replacing the present domestic rating system. He has gone very quiet on that subject.
In the Isle of Wight we had a slight improvement in the years of high inflation of 1975–76 and 1976–77, but this year we are going up only from £6·8 million to about £6·9 million, and all the time our needs have been getting worse. The hon. Member for Henley referred to a submission from my council to the Secretary of State. He quoted a page, but not some of the contents, and therefore I hope the House will bear with me if I give some facts.
First, those hon. Members who visit my constituency—and many do—know that we do not get the benefit of any cut-price petrol. The average price for four-star petrol is 83p a gallon. Someone did knock off a halfpenny, but he was sat on very hard.
These are the figures which the county surveyor has to pay on the Isle of Wight for materials as opposed to what is paid by other counties. For bitumen, we pay £10·30 per ton. Most southern counties pay between £4·95 and £5·90 For common LBC bricks we pay £38 per 1,000, while others pay £26 per 1,000. For plaster we pay £50 a ton, while on the mainland it is £34. For steel we pay £371 as opposed to £351 elsewhere. One can go on with the list.
One also has to consider ferry charges. School furniture costs £80 more because it comes over on a boat, and fares are to rise again in January. On 20 geriatric chairs a surcharge of £22 had to be paid. Constituents often ask why they have to


pay extra postage because they live on the Isle of Wight as opposed to the rest of England and Wales. It is true that some suppliers charge an extra sum. People know the cost of the car ferries. The sum can be anything from £5 or £6 to £13 or £14.
Our food costs have been worked out. The cost of food on the Isle of Wight is 2 per cent. above that in the rest of the country.
We have all those charges to face and it is very disappointing when one cannot get that fact over to successive Governments and have it written into the rata support grant element. The award this year must inevitably mean a 10p increase in the rates, or at least 16 per cent., and further cuts in already severely curtailed services.
The population in our county, as in others, has been increasing rapidly. I think that our percentage increase has been second only to that of Hertfordshire. About 15 years ago the population of the Isle of Wight was decreasing and we used to suffer from the old RSG formula because of that. The population was down to 92,000, but it is now about 112,000, and some think that it is, as high as 115,000. There has been a substantial increase, and we now have more old people coming to the island and more young people at school. About 22 per cent. of the population is now retired. The figures have gone up by more than 40 per cent. in both cases over the past 10 years and yet we are not receiving any more money to help provide services for these people.
What we need at 1977–78 prices is an increase of £2¼ million in our rate support grant, and not a derisory £100,000. We have 9 per cent. unemployment. I know that other areas have higher unemployment, but our figure is 3 per cent. or 4 per cent. higher than that in Southampton or Portsmouth. We are now in a desperate situation.
To add insult to injury—and this was the point made by the hon. Member for Hove (Mr. Sainsbury)—we are to pay more for our water this year because of equalisation. We were happy when we had our own water authority, but now that we are in the area of the Southern Water Authority we have to pay as much

as anyone else because we are to equalise, and because Wales has to pay less we shall have to pay more. We are still to make a domestic rate element payment to Wales of 36p in spite of the fact that we do not have the benefit of any improvements this year. How can I explain to my constituents that we do not get any new drainage schemes or have any additional plant put in by the Southern Water Authority and yet pay more? When I met the chairman, the other day, I learnt that we are not on the next five years' programme so far as any essential sewerage schemes in the island are concerned.
What can be done? First, we want a firm promise from the Secretary of State that there will be an alteration in this formula, or at least that he will find out some special factors that will recognise our situation. If we cannot have that, can we have a direct subsidy? London seems to have got that. Outside this settlement London seems to have got a direct subsidy.
I ask the Secretary of State to confirm—I think he will accept this and has already agreed it—that he will receive a further deputation from my council early in the new year. We must get some satisfaction. If we cannot have it this year, we must have a firm promise that we shall have it next year.
Further, the Development Commission comes under the Secretary of State's jurisdiction. Can we have a little more help from COSIRA? We have had some help. We have had over £ ½ million. So I recognise that COSIRA has been very good to us. If he can do a little more for us, that will be greatly appreciated.
More importantly we could save money if we reorganised our local government structure. If the hon. Lady had her way and there were a referendum on the Isle of Wight, overwhelmingly the population would vote for an all-purpose authority. That is what we want. I am concerned to read that the two district councils are now talking about building new office blocks. South Wight says that it wants to build a new office block and Medina says that it is going to build a new office block. This is absolutely crazy. For goodness sake, let us get our local government structure right and then we can go on and save a little more money. Let us have successor councils back in our main island towns.
We have always been a responsible authority. Whichever party has been in power we have honoured its restrictions and policies. We have never gone on a spending spree. The Isle of Wight still has not got a public indoor swimming pool, yet such pools are to be seen all over the country. We have not got one because in 1974 we cancelled the orders for it in accord with central Government dictat.
The Isle of Wight is not a wealthy county. It has one of the lower wage rates in the country. Other counties in the South-West claim that we are on a par with them. People who come yachting will know that the Isle of Wight is a county with a low wage rate. In all equity we deserve better. For this reason I must oppose the order tonight.
I want to make one other point on the increase orders, which we have hardly discussed. Will the Secretary of State confirm what the Home Secretary told the House recently, that any future pay awards—say, for the firemen, local government officers or others—will be the subject of a further payment? I do not think that it is covered in these increase orders.

6.58 p.m.

Mr. Robin F. Cook: At the severe risk of losing my audience I must make it clear at the outset that I do not intend to address myself to the Rate Support Grant (Increase) Order for England. I shall address myself to the Rate Support Grant (Scotland) Order, which is also before the House.
I begin with an observation that is common to both orders, namely, that I am struck with the thought that once again, as last year, we are debating both orders on the last day—other than the day of the Adjournment—before the Christmas Recess. It is a very odd way to treat an order which makes the biggest single allocation of public expenditure in the course of the year by leaving it to the fag end just before the Christmas Recess.

Mr. Sainsbury: Does not the hon. Gentleman agree, in addition, that it was on 22nd December last year that we debated this subject, which was even worse? In addition, we debate the order after the decisions have been taken in-

stead of the House being able to influence the manner in which the decisions are taken.

Mr. Cook: The hon. Member has made a very pertinent point, to which I shall return. The reason why this debate can be left so late until only a comparatively few Members remain behind after many other Members have gone to their pressing constituency engagements is that there is nothing that we can do about it, anyway. We cannot amend the order. We can table a motion asking the House to approve the order, but by a curious quirk of the Standing Orders an amendment cannot be called.
The only way in which we can influence the decision and the order is to try to impress the Secretary of State with the vigour and the eloquence of our argument, which I am about to try to do.
I begin by ingratiating myself with the Secretary of State by saying that I welcome the order as a big improvement on the efforts of the past two years. Last year's order had to play its part in the restraint on public expenditure and was designed to help to reduce the public service borrowing requirement for the current year. The Chancellor has now discovered that his estimate of that requirement was so grievously out that twice in the past 12 months he has had to return to the House with packages designed to increase the requirement to bring it nearer his target.
In retrospect, perhaps it would have made for a more stable and a more healthy local government system, not to mention a better service for those whom that local government system is supposed to serve, if calmer counsels had prevailed last year and we had not had the severe cuts that were made to the money available last year and which have since been replaced with equal abruptness by the restoration of the capital amounts available to local authorities. However, that is water under the bridge. This order is a big improvement on last year's order.
I want to make two remarks concerning the order. The first I shall make relatively briefly, but the other I shall have to dwell on at greater length. First, I wish to draw my right hon. Friend's attention to the concern that has been expressed about the figure of cash limits.


This figure is, as I understand it, 9·15 per cent. and has been worked out by COSLA as the figure for wage and salary increases over the coming year. However, the report on the order before the House says that this figure was drawn up "on the assumption that the Government's policies for pay are observed." The Government's pay policy norm is not 9·15 per cent. but 10 per cent. We know that that 10 per cent. is intended as a maximum norm and not a minimum norm. We are all acutely aware of how quickly a maximum norm set out in a pay policy turns out to be a minimum norm. The figure that COSLA is currently negotiating with the local authority manual workers is not 9–15 per cent. but 10·7 per cent.
Moreover, we are debating an order which will not only last through this current pay policy but presumably topple into the next phase, whatever it may be. The Government have already proposed a settlement to the police and a settlement to the firemen, although it has not yet been accepted, which will clearly generate settlements of more than 10 per cent. in the subsequent year. One can only presume that the Government hope for 9·15 per cent., on the basis that others will settle for less and that the settlements will thus average out. I doubt whether this is a realistic assessment. It is a doubt shared by COSLA. I ask my right hon. Friend to re-consider whether, given the trend of present pay settlements and the proposed reviews to which he has committed himself for the future year, it is realistic to propose a cash limit of 9·15 per cent. for 1978–79.
The second matter is one that weighs with me, and with my constituents rather more heavily. I was interested, listening to some of the preceding speeches, to hear a number of hon. Members complain that money was taken out of the comparatively rural areas and channelled to the inner city areas of England and Wales. It may come as a surprise to hon. Members when I say that I represent what is undeniably an inner city area. I represent the central area of Edinburgh, which has all the problems which are to be found in any other inner city area of 500,000 souls.
The effects of our rate support grant order, because of the effects of the rating revaluation that preceded it, will be to take £1·2 million away from Edinburgh

and £5 million away from the greater part of Lothian and give it to Strathclyde. My constituents, because of the effect of revaluation, will come out of the order with rather less money than they did last year, because they are not within Strathclyde. One might add that the consequences for public expenditure of not being within Strathclyde are becoming so grievous that we may be well advised to petition to become included within that region before the next order is drawn up.
I emphasise that revaluation is not something that the Government do. We cannot blame my right hon. Friend for it. Neither is it an act of God which my right hon. Friend is incapable of overturning or compensating for. It is an act of man. It is an act of several different men who arrived at different conclusions. The man who has been in charge of revaluation in Strathclyde has concluded that rateable values in Strathclyde have in real terms reduced by 12 per cent. in the five years covered by revaluation, which has the delightful consequence for those in Strathclyde that they get 12 per cent. more from the rate support grant.
On the other hand, the man responsible for carrying out the revaluation in Fife has come to the conclusion that rateable values there have increased by 20 per cent., and the man for Lothian has stuck on 7 per cent. That has had the disastrous consequence for the residents of those areas that their rate support grant correspondingly decreases.
It may be necessary to explain to hon. Members from England and Wales how such a situation arises. When the Act was passed in 1948 for England and Wales, and when a correlation was made between rateable values and the amount of rate support grant received as a result of that valuation, steps were taken in England and Wales to put revaluation on a uniform basis by putting it all under the valuation office of the Inland Revenue. That step was not taken in Scotland. We linked rateable valuation to the rate support grant but we did not create the uniform method of assessing revaluation. That was left to independent assessors in each region, who this time round have come independently to quite different judgments as to how property values have moved. The judgments bear no


relationship to any real index of economic needs or economic prosperity.
My right hon. Friend will be aware that the Layfield Committee recommended that a new base should be found for revaluation after the 1978 revaluation. It suggested that one way in which it could be done was by "some measure of personal income". It is difficult to find statistics to measure personal income movements over the past five years in the different regions of Scotland. I have tried, but I have been unable to do so. The figures are not available for 1973 and they are not yet available for 1977. However, we have the figures for 1974, 1975 and 1976.
How have personal incomes moved in the regions over the years 1974, 1975 and 1976, which are the three years within the five years covered by revaluation? We find that the movement bears no relation to the supposed move in rateable valuation that has emerged from revaluation. For instance, Strathclyde, which is one of the two regions in which rateable value has fallen, had the third highest increase in personal income over the three years. Lothian, the Borders and Galloway will all lose money as a result of the order following on revaluation. The money will be channelled towards Strathclyde, yet each of the three areas has had an increase in wage income less than the increase in Strathclyde in the same period. There is no relation between the economic prosperity of the area and the shift in notional rental values.
There is exactly the same absence of a correlation in unemployment. Strathclyde now, as in 1973, has the second highest rate of unemployment in the whole of Scotland. However, its increase in the past five years has been no more marked than in other areas of Scotland. The Highlands and Borders have had a higher increase in unemployment over the past five years, but they will lose out in terms of the rate support grant while Strathclyde benefits. The most curious example of all—perhaps it is the most savage—is that the Western Isles, which had in 1973 and has now the highest level of unemployment in the whole of Scotland, is to lose 8·7 per cent. of its rate support grant as a result of revaluation, while Strathclyde benefits.
I can see no conceivable objective or impartial standard of economic measurement that could come to the conclusion that over the past five years the Western Isles have developed 20 per cent. faster than the Strathclyde Region. However, that is precisely the conclusion that has been arrived at in the course of the revaluation exercise.
The truth is that notional rented property values are now so notional that in no way do they reflect real economic prosperity. They are an exceedingly false basis on which to calculate the disbursement of rate support grant.
There are two ways in which the Secretary of State may respond to this problem. First, as he will be aware, the Layfield Committee recommended a review of the method after the 1978 revaluation. I am bound to say that when rateable notices pass through the letter boxes in Lothian, in the Western Isles and, most of all, in Fife, where there has been a 20 per cent. increase in valuation—

Mr. Ian McCormick: And Aberdour.

Mr. Cook: Yes, including Aberdour.
When the rateable notices pass through the letter boxes, there will be such an upsurge of indignation, incomprehension and bewilderment about the rateable system and the revaluation exercise that my right hon. Friend will be well advised, at an early date—and preferably before that happens—to announce how he proposes to work out the next revaluation exercise so that it is plain that we shall not have a repetition of this completely arbitrary judgment.
Secondly, and more to the point, I hope that my right hon. Friend will take some step to compensate in the rate support grant disbursement for the effect of revaluation. I have attempted by tabling an amendment to the motion approving the order to point to the way in which that might be done.
At present the Secretary of State applies a straight population multiplier to the resources element. I understand that he could if he wished—it is a matter of his own discretion and it could be done even if we approved the order—apply a weighted population figure as the multiplier. I urge him to consider taking that


course. I remind my right hon. Friend that there is no requirement that that should be a permanent measure. However, we require a transitional arrangement to cope with the impact of the revaluation, which is founded on a wholly arbitrary base. My right hon. Friend will appreciate—this is unusual for the demands that I make of him—that there would be no additional public expenditure. It would merely affect the way in which the global amount is disbursed. It would not mean my right hon. Friend having to write a larger cheque at the end.
There is one final consideration that I hope will weigh with my right hon. Friend when he considers how he can respond to my recommendation. He will be aware that we had a debate only two days ago on the Housing (Financial Provisions) (Scotland) Bill, which proposes to extend to housing subsidies precisely the exercise that we are now going through in respect of the rate support grant. He will be answerable to the House for housing subsidies, which will become housing support grants, as he is answerable to us for the rate support grant.
As my right hon. Friend will be aware, some Labour Members, including myself, doubt whether there will be adequate parliamentary control over the way in which the money will be disbursed. We shall not be able to table amendments. We shall be able only to plead with the Secretary of State and to use the vigour of our arguments and our eloquence. I draw it to my right hon. Friend's attention that it is inevitable that in Committee, in making our judgment on the Housing (Financial Provisions) (Scotland) Bill, on the question whether it will give us enough control over the Executive's expenditure, we shall reflect on the weight that he has attached to the views put forward in this debate and the recommendations and representations made to him outside the Chamber on the effect of revaluation.

7.12 p.m.

Mr. Iain MacCormick: It is necessary to be careful about the debate on the Scottish order. I am glad to be following the hon. Member for Edinburgh, Central (Mr. Cook) as I believe that very much of what he said is correct. I am astonished to look to my right and to see on the Opposition Front Bench those

who have created the situation in Scotland that is now having its effect in exactly what we are debating tonight.
I am convinced that the one thing that we do not need in Scotland is too much centralisation of local government. It is odd that Conservative Members—especially those from Scotland—should be able to come to the House to debate another measure largely on the issue of whether Scottish Members should be able to vote on English measures when it was the Conservative Government who railroaded through the Local Government (Scotland) Bill with a majority of English Members.

Mr. Teddy Taylor: Does the hon. Gentleman appreciate that he is talking a load of rubbish? Is he aware that the local government reform Bill for Scotland was approved by the Scottish Grand Committee without one voice of complaint from a Labour Member, a Liberal Member or from the SNP Member who was present? The local government reform of which the hon. Gentleman is making such a meal in his constituency and elsewhere was not objected to in principle by the representative of his own party or by any other.

Mr. MacCormick: If the hon. Gentleman is saying that he is proud that the Conservative Government put on to the statute book the Local Government (Scotland) Act 1975, fair enough. If I had had any part in putting that measure on the statute book, I should be ashamed. The people of Scotland will be interested to know that the hon. Gentleman is so proud of it.
I return to the issues that are before us. Although one cannot quarrel totally with what the Government are doing, there are certain elements to which we must object. In considering the debate that has taken place so far on the resources element, I must echo to some extent the remarks made by the hon. Member for Edinburgh, Central. I agree with much of what he said about the revaluation that has taken place in Scotland this year. The people of Argyll, whom I represent, will be hit far too hard. The people of Argyll face a three-fold increase in their rates, and that is something that we cannot put up with. I should like to ask the Secretary of State for Scotland to take another look at the whole effect of


this order on the people who live in rural areas—not just in Argyll, but in places such as Ayrshire and Fife—who seem to be suffering in the same way as my constituents.
I often wonder exactly why we are voting these huge sums of money to local authorities in Scotland. It is not just that the people of Argyll will suffer from the implementation of the order. They are suffering enough already. I received the other day the massive report called the Strathclyde Structural Plan. As far as I can gather it makes two statements. First, it says that the population of Argyll will decline by 20,000 people over the next 20 years, and it says that the people of Argyll do not want houses over that period. That is hardly a sensible argument.
In view of the situation which already exists in rural Scotland, does the Secretary of State think that the present rate support grant order is a sensible and fair measure for spreading the load which we all know we must bear? Does he think, bearing in mind what is being done, that the people who live in rural parts of Scotland are having to face not only a punitive level of rating but punitive pressure on life?

7.17 p.m.

The Secretary of State for Scotland (Mr. Bruce Millan): When it was arranged that these debates would be taken together—largely because the Opposition wanted it that way—it was arranged that at a convenient opportunity I should intervene to deal with the Scottish order, and I suggest that this might be such an opportunity.
My right hon. Friend the Secretary of State for the Environment mentioned something of the general economic background and the Government's approach to the rate support grant settlement for next year. It is not necessary for me to cover that ground again, but I will run over some of the major considerations and aspects.
First, on relevant expenditure, I agreed to an increase of about £16 million in the provision for 1978–79 compared with what was in the last White Paper for that year. That means that, although total expenditure is not substantially above what the White Paper indicated, there has been a certain reduction of pressure on local

authorities, and that means that, in certain services, they will be able to do a number of highly desirable things, and I was happy to be able to make that increase in expenditure. It brings total relevant expenditure to £1,517 million.
Secondly, I decided to maintain the percentage rate of grant at the same figure as for last year—namely, 68·5 per cent.—for reasons similar to those explained by my right hon. Friend when he dealt with England and Wales. This has very much to do with the question of stability and keeping any increase in rates for next year down to modest levels.
Within the relevant expenditure, I have made provision in education for continuation of the scheme for the employment of teachers in areas of urban deprivation, and also within the educational figures I have allowed for expenditure rather above the levels that we would have produced if we had maintained strictly the pupil-teacher ratios which we have agreed with the local authorities. So there is a certain margin available for the authorities to take account, for example, of the problem of declining pupil numbers in terms of getting educational expenditure reduced proportionately to them.
Again, I have made extra provision for the urban programme, and in general the additional provision in relevant expenditure will enable local authorities in a modest way to do one or two things that the very tight constraint on local authority expenditure over recent years has not allowed them to do.
When in our debate last year I dealt with actual expenditure in 1976–77 I said that I thought that local authorities would be able to achieve more savings than they had declared at that time. Local authority expenditure in 1976–77 was within about £4 million of the estimate on which the order for that year was based. In 1977–78 the budgets of local authorities are again within £2 million of the relevant expenditure on which the rate support grant order was based. I believe, therefore, that we can say that, after considerable difficulty the local authorities have managed to get their expenditure under control and within limits that are very much the same as the limits that have been laid down in successive rate support grant orders. I simply pay tribute to the Scottish local authorities for what I believe in that respect to have been a very considerable achievement.
The most marked change in the rata support grant for 1978–79 is in the domestic element, because relief to domestic ratepayers has been reduced to 3p in the £. I want to explain why that is so.
It takes account of the 1978–79 rating revaluation, which has had two particular relevant effects. In the first place, domestic valuation will be increased overall—I emphasise "overall" because an individual valuation may be very much outside the general pattern—for next year to a considerably lesser extent than non-domestic valuations. The total rateable value represented by the domestic category therefore falls from 18 per cent. in 1977–78 to 39 per cent., with, of course, corresponding increases in the other categories—for example, industrial commercial and miscellaneous.
Last year's domestic element was 31p in the £, and, taking account of the revaluation factor, the equivalent figure for 1978–79 would have been lip in the £, but I have reduced that to 3p in the £ so that the full benefit of revaluation will not go to the domestic ratepayer in 1978–79. I have tried to shield the non-domestic ratepayer from some of the increases in rates that he would otherwise have to pay because of the effect on him of the revaluation.
I decided that the appropriate figure was a reduction to 3p in the £, but even with that domestic rate payments in Scotland overall in 1978–79 should be significantly less than they have been in the current year. The total rate payments in Scotland in 1978–79, as in England and Wales, will increase by an amount which will be within single figures.

Mr. Robin F. Cook: My right hon. Friend is, no doubt, correct to refer to the average for the whole of Scotland, but because of the effect of revaluation—I accept that that is not entirely his responsibility—the increase in the areas outside Strathclyde is likely to be well in excess of 10 per cent.

Mr. Millan: I do not accept that, but if my hon. Friend will be patient I shall deal with the points he has made about revaluation.

Mr. MacCormick: I want to echo what has been said by the hon. Member for Edinburgh, Central (Mr. Cook) and to

add that it is not just ratepayers outside Strathclyde who will suffer. There are those in Strathclyde who will suffer from this approach. Ratepayers in Argyll and Ayrshire, for example, will suffer very badly because of this approach.

Mr. Millan: I do not know what the hon. Gentleman means when he says "because of this approach". He is talking of the effects of revaluation. I have said that I shall deal with that in a moment if I am allowed to do so. It follows logically that if the overall increase is within single figures, and assuming that local authorities keep within the expenditure guidelines, as I believe they will, overall domestic ratepayers will pay less than in 1977–78. Some domestic ratepayers in particular areas will pay more. Other domestic ratepayers elsewhere will have very considerable reductions indeed in the domestic rate payments in 1978–79.

Mr. MacCormick: rose—

Mr. Millan: Let me first deal with the question of revaluation, if I may.
Obviously, anyone from an area where revaluation produces higher than average increases of rateable values will not like it. On the other hand, those of us who come from areas where the increases in rateable values have been less than the average—this happens by chance to be the case in my own constituency—will find that the rateable burdens will be very considerably reduced in 1978–79.
I was asked why we should not make transitional arrangements. I discussed this matter quite extensively with the Convention of Scottish Local Authorities, and we had a working party of officials whose unanimous recommendation, which, again, was accepted by COSLA itself, was that there should be no transitional arrangements. This was agreed at a meeting that I had with COSLA, when I put the matter specifically. As I recollect, at that meeting it was agreed by the COSLA representatives, including representatives from areas which have suffered from revaluation—

Mr. MacCormick: rose—

Mr. Millan: Will the hon. Gentleman allow me first to finish this little bit of the argument?
At the meeting with COSLA it was unanimously agreed that there should not be transitional arrangements. There were two reasons for that. First, there are practical and administrative reasons. Some transitional arrangements would require legislation, but there were also practical reasons against the transitional arrangements. The view was also taken that the new valuation figures would in principle—and, I believe, also in practice—represent a fairer deal in terms of the impact on the distribution of rate support grant than the present arrangement.
It can be argued, and the representatives from the areas which have gained from revaluation argue very vigorously, that all the revaluation for next year will do is to bring them long delayed justice in terms of distribution of Government rate support grant. The revaluation has been delayed. It ought to have been in 1976. I think the areas that will gain from revaluation are perfectly entitled to argue, with very considerable merit, that they have been, as it were, left out of the additional Government support in the last two years. All that will happen from 1978–79 onwards is that they will receive something that they ought to have received at least two years ago. I believe that in principle—

Mr. MacCormick: rose—

Mr. Millan: Will the hon. Gentleman wait a little longer?
I believe that in principle it would be wrong to make transitional arrangements for revaluation, but I repeat that, whatever I feel about this, it was unanimously agreed with COSLA. When the matter was discussed with COSLA at my final meeting with those concerned, when the rate support grant settlement was finalised, and when the effects of revaluation were known to the representatives of the different authorities, I did not have representations from COSLA that I should make transitional arrangements. It is not, therefore, a question of my imposing this particular pattern, because it is something that I have agreed with COSLA, and I do not believe that I should change it now.

Mr. MacCormick: I have no intention of representing COSLA. My only intention is to represent my constituents in Argyll. Is the Secretary of State really

saying that we are somehow to be punished in order to benefit people who live in a great conurbation as opposed to a country area?

Mr. Millan: There is no question of the hon. Gentleman's constituents being punished. [Interruption.] Will the hon. Gentleman allow me to finish what I am saying? There is no bias written into the revaluation against rural areas or in favour of them. The valuation principles are consistent between, one area and another, between one part of Scotland and another, and between rural and urban areas. There are many rural areas in Scotland where the valuations have traditionally been very low, and there are some urban areas—even areas of deprivation—where the valuations have been traditionally very high. I am not making a value judgment on that. I am simply saying that the principles have been applied everywhere in the same way, and it has turned out that in some areas revaluation has meant higher increases than in other areas. But, as I say, the view that I would basically accept is that that is retrospective justice and that there is no argument in principle for a transitional arrangement.

Mr. Robin F. Cook: I am surprised at my right hon. Friend's observation concerning the unanimity of COSLA, as only last Friday I and the hon. Member for Midlothian (Mr. Eadie) were present at a meeting of councillors and officials of Lothian Region when they expressed precisely the view about transitional arrangements that I have put in my amendment. May I, therefore, urge my right hon. Friend to clarify whether the weighting of population element is a matter within his discretion once the order is approved? If so, will he bear in mind the representations of the Lothian Region, which appear not to have been reflected by its delegates on the COSLA working party?

Mr. Millan: The convener of the Lothian Region is on the COSLA finance committee, which negotiates with me on the rate support grant. Therefore, it just will not do for any hon. Gentleman to talk about representations in that sense. The representations were in the other direction—that we should maintain the revaluation without transitional arrangements. The COSLA finance committee, which meets me on these matters, is, in


my view, representative of the whole of Scotland, and certainly includes the Lothian Region and the Fife Region, which is the other region concerned. The convener of COSLA is Sir George Sharp, who is also the convener of the Fife Region.

Mr. Teddy Taylor: rose—

Mr. Millan: I must press on, because other hon. Members want to make speeches about England and Wales.
I think I have dealt with the particular matter that was raised. Of course, I could make adjustments. I suppose that, technically, there would be possibilities, but I do not believe that there is a case for it. In regard to the needs element—

Mr. Teddy Taylor: I am grateful to the Secretary of State for giving way. In view of the change in the balance of the rates, with more on the East of Scotland and less on the West, and with the big increase in the valuations of industry, has the Secretary of State given any consideration to the impact of what will be a very big rise for some industries in some places where there is very high unemployment? Does he not think that this could be a severe problem in Scotland, with 180,000 unemployed?

Mr. Millan: I was about to go on to say that I am maintaining the industrial derating at 50 per cent., and was about to announce that in a couple of minutes. What I have done with the domestic element, by reducing it very substantially in real terms, helps to cushion the impact of increased rates on industrial and other ratepayers in Scotland. I have done it in that particular way and I am maintaining the element of industrial derating at 50 per cent.
I will now pass from the needs element to the resources element and say that the distribution of that is determined by the rate poundage in the area concerned, and by the difference between the penny rate product and the standard penny rate product, which, in turn, is determined by the national standard amount. We had difficulty last year because the preliminary calculation turned out not as accurately as we should have liked, and I am doing it in a different way this year for the better convenience of local authorities. My current

expectation is that the national standard amount for 1978–79 will be of the order of £2·81.
The cash limits have been calculated for Scotland on the same basis as for England and Wales. They take account respectively of the whole period up to 31st March 1979. For example, in respect of wages the period goes beyond the period of the current pay guidelines, which run for approximately 12 months, into a period beyond that. In general they take account of the reducing rate of inflation and the Government's expectation that inflation will continue to be reduced during 1978. I believe that the cash limits, calculated on that basis, are fair to the local authorities
I sum up by saying that in current circumstances, looking at the economic circumstances, at the need to maintain local authority services at a sufficient but not an extravagant level, and at the need for economy in local authority expenditure, the 1978–79 settlement for Scotland is fair and reasonable. Whatever the argument may be about the effect of revaluation, that is also the assessment of this order made by most local authorities in Scotland.

7.37 p.m.

Sir Bernard Braine: As this debate proceeds, there is a growing tide of protest reflecting frustration and even controlled anger against the rate support settlement set out in the orders. It is quite remarkable that that protest comes not merely from the shire counties, from the North to the South and from the East to the West of the kingdom, but from both sides of the House.
As the Secretary of State for the Environment was not here at the time—[HON. MEMBERS: "Where is he?"] He is not here now, either. But as he was not here during the speech of his hon. Friend the Member for Rotherham (Mr. Crowther), I suggest as politely as possible that even if he does not heed what is said by shire Members on the Opposition side of the House, perhaps he will read and reread the robust, refreshing and sensible speech of his hon. Friend. I hope, too, that he will study the extraordinary anomalies brought out by the hon. Member for Edinburgh, Central (Mr. Cook) and by the hon. Member for Isle of Wight (Mr. Ross).
In Essex, all constituency Members, both Conservative and Labour, joined in a protest to the Secretary of State about what was envisaged for our county. We asked for a meeting with him. As yet, we have had no reply to our request. I must, therefore, protest strongly against the settlement as it affects my county. I listened very carefully to the Secretary of State. On occasions, he can be very persuasive, but he was not today. He said nothing that changed my view that the settlement is unfair and inequitable for all the shire counties.
My hon. Friend the Member for Henley (Mr. Heseltine), in a very vigorous and telling speech, was right. The British people are generally prepared to accept sacrifices when it can be demonstrated to them that these are necessary, just and fair, but they are also rightly suspicious of the use of political power to favour one section of the community at the expense of another. It is not lost on the ratepayers of Essex—our local Press takes a deep interest in any matters touching on the rates—nor on other disadvantaged ratepayers that a cynical exercise is being carried out at their expense. Moreover, this is not the first time that this has happened. It follows on from the savage cuts in grant that we and other shire counties experienced last year.
As a consequence, our ratepayers face bills substantially in excess of the national average because of the high rateable value of their proporties. Over and over again, hon. Members have had to remind the Secretary of State that in counties with properties with high rateable values the burden can be very heavy. It is not right that our ratepayers, after the burden that they had to assume last year and the year before, should be asked to bear further increases above the national average in order to offset continued withdrawal of grant.
Before considering the effect of the arrangements for 1978–79, it is relevant to mention the effect of last year's arrangements. Essex then sustained a cut of £8·5 million. The brunt of that was felt by our education service. It is to the tremendous credit of the Essex Education Committee that it managed to avoid making economies which affected the quality of education. The teacher-pupil ratio was preserved. But the cut meant that capitation allowances were

slashed, college staffs were reduced, the lighting and the cleaning of schools were cut, and library services were reduced. Evening class fees had to be increased and school meals charges had to be enforced.
There were reductions, too, in our road maintenance and in supporting staff for the police at a time when every county in the land, including our own, faces a rising tide of crime. Two new homes for the elderly were used to replace three older homes which had to be phased out. There were reductions in the administration and maintenance of services for the elderly. But the main point in all this is that ours is not a static community; it is an expanding one.

Mr. Julian Ridsdale: Is my hon. Friend aware that in North-East Essex alone, in one district the number of people over 65 years of age is 33,000, and that the district's share in the rate support grant over the past four years, under the Labour Government, has meant a 20p in the pound increase in rates? This year there will have to be a 3p increase in the pound rate. Is that fair?

Sir B. Braine: I am aware of the situation in my hon. Friend's constituency. I see my hon. Friend the Member for Braintree (Mr. Newton) here. He and I are closely concerned with the services for the elderly in the county. We can testify to the truth of what my hon. Friend the Member for Harwich (Mr. Ridsdale) says. The situation that he describes is unfair. It must be an intolerable burden on the local authorities in his constituency.
My hon. Friend represents a constituency with a very high proportion of elderly people. Indeed, Essex as a whole is a county bursting at the seams. That is not only because it attracts a very large number of elderly folk of slender means who come to spend their last years in our county. It also attracts young families, incidentally coming mainly from London, buying their first homes. In short, it is one of the fastest growing areas in the country. The pressure on our existing services is at its maximum. My hon. Friend the Member for Harwich rightly reminded the House of the situation of counties with expanding populations. I imagine that this is true also of Kent, Hertfordshire and Surrey.
In passing, I might say that we are talking about a county which is singularly deprived in other respects. Essex has roughly the same population as Kent—1·4 million—yet it has £20 million a year less to spend on its health services than Kent. God knows why, but that is a fact. Are the people of Essex any less in need of doctors or hospital services than are the people of Kent?

Mr. A. P. Costain: They could not be much more in need than the people of Kent?

Sir B. Braine: I am aware of that. My hon. Friend will know that poverty is relative. The plain fact is that, badly-off though Kent may be, Essex, which has the same population, receives £20 million a year less for its health services. In addition, my constituents and those of every Essex Member present in the Chamber are having to pay a swingeing increase, about the fourth in the past four years, in rail fares, beginning next year. But, unlike other commuter areas, there is to be no improvement in our services. This is the background against which the proposals envisaged in these orders will be judged by the ratepayers in our county.

Mr. Tony Newton: Does my hon. Friend agree that not only is Essex £20 million under-funded on the health services but that one of the clues to the political nature of what is being done is that, whereas on the rate support grant the Government are happy to redistribute resources to London, on the resources allocation exercise in the health service they have drawn back from the recommendation of reallocating resources from London to Essex?

Sir B. Braine: My hon. Friend is absolutely right. My hon. Friends the Members for Southend, West (Mr. Chan-non), Southend, East (Sir S. McAdden) and Maldon (Mr. Wakeham), who were associated with me recently in making representations to the Secretary of State for Social Services about ward closures, can testify to that. The plain fact is that, look where one will, whether in the administration of the health services or the allocation of resources for local government services, there is no principle. Perhaps it can be said that only one principle is applied to this administration, and

that is that there shall be no principles at all other than those which serve to ensure the survival of the Government.
When we look at the rate support grant settlement for 1978–79 we are driven to the same conclusion. The settlement is based on the notion that it is politically feasible to milk taxpayers and authorities in one part of the country and subsidise others. It substantially ignores population growth and decline and is based on a view of our capacity to control inflation held by the Chancellor of the Exchequer but with which no county treasurer in the country agrees.
Let me take one practical example of how these proposals will affect ratepayers in Essex. I take the example of two ratepayers living in virtually identical properties close to each other. Their incomes are roughly the same. One property is on the Greater London side of the border, in Redbridge, while the other is in the adjacent area of Epping Forest, in Essex. Let us see how these two house owners fare under the changes which the Government are manipulating. I am dealing with actual examples here. The rateable value of the Redbridge house is £250, while that of the Epping Forest house is £245. In 1976–77 the rate bill for the Redbridge property was £6 higher than that of the Epping Forest house. In 1977–78 both rate bills were tip but the Redbridge bill was £13 lower.
This year, making certain assumptions about the level of the rate, and according to the best calculations that our county treasurer can make, the Epping Forest house owner will pay £42 more in rates. Where is the logic in this? Where is the equity? Where is the justice? There is no rhyme or reason in it. All the calculations may have been made and fed into the computer, but if what comes out is vicious nonsense of this kind, setting man against man—[Interruption.] This is no laughing matter, as the hon. Member for Ince (Mr. McGuire) should know. It is what people pay in rates which will very much determine—

Mr. Michael McGuire: rose—

Sir B. Braine: Let me finish. The hon. Member should not have laughed in the wrong place. What people pay in rates concerns them very much. It makes a mockery of any tax reductions that are to


come, particularly when we bear in mind that the people of Essex will have to pay through the nose for the privilege of travelling to work—if there is any work for them next year.

Mr. Michael McGuire: May I make two comments? First, we are not yet being televised. Second, if I am lucky enough to catch Mr. Deputy Speaker's eye I shall make out a stronger case than the hon. Member is making for his area for an area which I believe has a better claim than any to receive extra help but has not received it. The hon. Gentleman does not represent the only deprived area.

Sir B. Braine: That is why I was surprised to hear the hon. Gentleman laughing. I have great respect for him and I am delighted to hear that he will be joining the swelling tide of protest.
The fact is that so far we have heard absolutely nothing about the protests made to the Secretary of State by hon. Members representing Essex constituencies. That is uncharacteristic of him. It may be that we shall get no reversal of this inequitable arrangement. The least, and certainly the fairest thing, that the right hon. Gentleman could do would be to distribute the 1978–79 needs element pro rata to the 1977–78 distribution. This standstill in grant distribution would be consistent, I suggest, with the overall standstill envisaged by the Government for local government spending next year. Here at least is a principle. I beg the Secretary of State, in his welter of non-principle, to grasp at a straw and to give some comfort to our people—to give them a glimmering of hope that the Government can at least base their policy upon a principle that is consistent and easily understood.
I shall be interested to know whether we shall hear tonight that the Under-Secretary, who is to reply to our debate, is instructed to say that this suggestion will be considered. If no hope of that kind is given to us I, for one, shall vote against the orders.

7.52 p.m.

Mr. John Cartwright: Apart from what I might call the Scottish interlude, this debate has evolved as a sustained attack on London and I am grateful for the opportunity to begin to put the case for the defence. Before doing

so, there are two general comments I wish to make. First, I very much welcome what my right hon. Friend said about the co-operation that he has received from local government over the past difficult two years. Too often councillors have been the whipping boys of national politicians. We should remember that councillors do not get themselves elected to preside over standstills and cuts in services. The fact that they have done so in the past couple of years is something that reflects great credit upon them.
Second, I endorse what my right hon. Friend said about the regression analysis. It is certainly not the ideal way of distributing the rate support grant needs element. Simple it is not. Its complexity seems to be increasing year by year. There was a time when I thought that I almost understood it. Those days are long gone. My right hon. Friend is right when he says that no one has yet produced any better basis for determining the needs of local authorities to spend to meet the problems they face. What is worrying is that some of the information, perhaps a good deal of it, on which the regression formulae are based is getting rapidly out of date. Much of it is based on the 1971 census. There is a need to get the information more up to date.

Mr. Ronald Brown: Would my hon. Friend not agree that many of us have been arguing that for a long time yet we did not hear the chorus of voices from the Conservative Benches complaining about the situation? My hon. Friend might ask Conservative Members who have been shouting why they were not shouting long ago.

Mr. Cartwright: I am grateful to my hon. Friend. Some of the comments we have heard suggest that this position began with this rate grant distribution. That is not so. It goes back a long way.
I find it a little hard to recognise the picture that some Conservatives paint of London. They suggest that the streets of London are paved with gold and that Londoners are living in £500,000 or £1 million houses and driving Rolls-Royces. That is not a picture that my constituents would recognise.
We should look at the history of the rate support grant as it has affected London. London has never received its full


entitlement. Until 1975 London's spending was never even involved in the regression analysis. It was argued that because London had large rateable resources its spending should not be involved in the analysis. Ordinary Londoners are hit in two ways by this thinking. They have high rateable values, which mean that they end up paying high rates. In the current situation if one takes comparable properties, the average London rate for a three-bedroomed house is £191 a year. The average rate for the same house anywhere else in the country is £128. Therefore, Londoners are paying an extra £63 for identical property.
Secondly, Londoners were hit tremendously by the large rate income that is paid to local authorities and the assumption that this means that those local authorities need less help. A smaller proportion of local government spending in London has been met by the rate support grant than in the rest of the country and this has been the situation for a long time now. It is time that these matters were put right.
The campaign to put it right has been a joint one involving both political parties and London Members on both sides of the House. But as I survey the Benches opposite it seems that London Conservatives have their heads so far below the parapet as to be absolutely invisible.
In 1975 we had London spending included in the regression analysis. Unfortunately that was not the total factor. The Department of the Environment dreamed up the claw-back. It meant that London was entitled to inclusion but there was a claw-back of benefit to the rest of the country. This meant that the rest of the country was entitled to a slice of the benefit that came from including London in the analysis. In the current year the claw-back is of the order of £403 million. Next year it will be reduced to £270 million, but it is still a claw-back away from London. The Secretary of State has made it clear that he has based his assessment of claw-back on factors that will ensure that Londoners pay the same rate increases as other parts of the country. But, by his not narrowing the gap, Londoners will still be paying higher rates than the rest of the country. This means that London is forgoing £270 mil-

lion of its entitlement under the rate support grant, and the benefits will go to other parts of the country whose ratepayers are paying less anyway.
It is worthwhile looking at the actual rates paid by a number of local authority areas. I have figures for nine counties about which the Association of County Councils made a great song and dance. Only Hertfordshire is in any way comparable, in terms of rates paid, with London. If we look at the highest of the remaining eight counties we find that the average in Buckinghamshire is £151 for a three-bedroomed house. In Essex it is £148, in Northumberland £108 and in Wiltshire £102. If we look at the identical house in London we find the average rate is £191. In some areas the rates are of the order of £424 a year. This is so in Camden and Westminster. Some people may say that these areas are not typical of London because they have some very salubrious areas within their boundaries.
For the sake of argument, let us look at Southwark where the average rate is £212. This borough includes areas that certainly could not be called salubrious. We also find that in Tower Hamlets—hardly the most desirable place in London—the average rate is £210. Therefore, the ratepayers in Tower Hamlets are paying twice as much as those in Wiltshire and they are living in an environment that is very much less pleasant.
We must consider the argument that while the rates are higher in London the services are very much better. A representative of the ACC claimed that London enjoyed very much higher standards of services than other parts of the country. While it is true that standards are, in some cases, higher, it is also true that the problem; are very much worse. The teacher ratio in Hackney might be better than that in Leamington Spa, but this does not mean that the standard of education is any better in Hackney. It simply reflects the fact that the problems are worse in Hackney and more teachers are needed.
The DHSS recently undertook a study using 23 indices of social deprivation and it placed eight inner London boroughs among the 10 most deprived administrative areas in the whole of England.


Another six had similar problems on a smaller scale. Those eight boroughs contain 4·2 per cent. of the population of England—more than the population of the whole of Merseyside.
Sometimes we forget the problems of unemployment. There are more people unemployed in Greater London than in Scotland and twice as many unemployed in Greater London than in the whole of Wales.
It is claimed that great benefits come to London from industrial development and large numbers of factories. That is a great laugh in my constituency where we used to have factories, but they have all gone to places like Rotherham and The Hartlepools. They are certainly not in my constituency any longer. Between 1961 and 1974 industrial employment in London fell by one-third, with a loss of half a million jobs.
London has 12 per cent. of the total industrial floor space in England and Wales and of that 30 million square feet is vacant. This represents one-quarter to one-third of all vacant industrial space in England and Wales.

Mr. Ronald Brown: Can my hon. Friend give the corresponding figures for office employment and development?

Mr. Cartwright: I can tell my hon. Friend that office employment tends to concentrate in the inner core of central London. It is not of great benefit to many of my constituents in Greenwich, nor to many of his constituents in Hackney. Also, the office issue is not quite the bonanza that it was once. Many valuations for commercial properties were made in 1973 at the height of the boom, and big business is very adept at appealing against these estimates. There is a backlog of appeals to be heard and rate income has been cut.

Mr. Ronald Brown: Does my hon. Friend not agree that the people who are taking those jobs come from Essex, Surrey, Kent and all the way round the country, and therefore his argument that they are all filled by people living in Hackney and Tower Hamlets is nonsense.

Mr. Cartwright: One of the problems of inner London is that we have not

provided a balance of opportunity. The office jobs which are provided do not meet the immediate needs of the unskilled worker who visits the employment exchanges.

Mr. Steen: Does the hon. Gentleman not agree that there are 14,139 acres of land vacant in London and that the majority of it is in the ownership of local authorities or nationalised industries?

Mr. Cartwright: I do not dispute that figure. A good deal of vacant land in London is dockland. We all know the problems involved in developing those docklands and the difficulties that have stood in the way of progress. This underlines the point I was trying to make—namely, that that kind of area at one time yielded a substantial rate income but no longer yields it because those areas are empty and unused.
Let us examine other social issues and the problems of social deprivation in local authorities. Let us look first at the situation in regard to homelessness. I have examined the incidence of homelessness in the nine boroughs over which the Association of County Councils has wept such bitter tears and compared it with the situation in inner London. Taking the families accepted as homeless for the six months ending December 1976, expressed as a proportion per thou-said households, we find that in Wiltshire 272 families became homeless in that period, representing 1·7 per thousand households in the country. In Northants the figure was 192 homeless families, 0·2 per thousand households; in Essex the figure was 316 families, 0·7 per thousand households. If we take the situation in inner London we see that in Tower Hamlets there were 279 homeless families in that same period representing 4·8 per thousand population; in Lambeth 403 homeless families, 3·6 per thousand; in Hackney 326 homeless families, 4·1 per thousand; and so on, in that area. That indicates the difference in scale when one examines the problems in inner London
When we examine the numbers of families in homeless accommodation at the end of 1976, we find in Kent a figure of 148—a high figure for a county. At the other end of the scale, the figure in Northumberland is only six and in Buckinghamshire only eight. However, in inner


London the number of families in homeless accommodation in that period in Tower Hamlets was 277, Lambeth 252 and Camden 183. London's proportion of the total population of England is 15 per cent., and the London area has 30 per cent. of the nation's total of homelessness and 55 per cent. of those who are in homeless accommodation, compared with the rest of England. That illustrates the problem with which we are dealing in London.
Let us take the children in residential care expressed per thousand of population under 18. In Northants the figure is 6·6 per cent., Wiltshire 5·6 per cent., Essex—and I see that its champion, the hon. Member for Essex, South-East (Sir B. Braine), has departed—4·4 per cent., and Buckinghamshire 4 per cent. The situation in inner London is very different. The figure of children in residential care per thousand population under 18 in Tower Hamlets is 31·5 per cent., Kensington and Chelsea 26·3 per cent., and even in Westminster, the area in which we are now meeting, the figure is 23 per cent. That again points to the problems which we face in inner London.

Mr. Ronald Brown: Will my hon. Friend also confirm that many of the homeless families come from other parts of the country to London, and include homeless families from Rotherham. Wales and other places?

Mr. Cartwright: What worries me is that when people read all these stories of million-pound houses, Rolls-Royces and London streets paved with gold, it might lead them to come in even greater numbers to London.
We must face the fact that in London we have all the ingredients of the problems which for years have beset big cities in the United States. We have a picture of considerable deprivation and growing social problems. At the same time, London's rate base is declining. This has happened because the population is falling and the resources are declining because of the departure of industry from the area and the decline in commercial operations.
The situation more than justifies the fact that London's share of rate support grant should rise from 19·6 per cent. to

21·6 per cent. Having listened to this debate, I am a little worried that we may be drifting into the New York syndrome. Many areas in the United States have for years ignored the problems of New York City. It would be a tragedy if similar barriers were raised between London and the rest of the country.
Bearing in mind what the Government have said about inner city problems, I believe that this must mean that more of the rate support grant to which London is entitled must go to London. I look forward to hearing what the London Boroughs Association and the Association of Metropolitan Authorities will say when a claw-back is needed and when London gets its full entitlement. In the meantime, I very much welcome the Government's action in this sphere.

8.7 p.m.

Mr. Wyn Roberts: The hon. Member for Woolwich, East (Mr. Cartwright) was eloquent in his defence of London's share of the rate support grant but he seemed to be setting out to prove that all parts of the country are becoming poorer and more needy under a Labour Government.
I disagree with the hon. Gentleman in his argument about the varying rate payments in different parts of the country. We cannot simply make a straight comparison between one area and another without considering the level of increase in average incomes in those areas. The rate support grant settlement for the coming years is causing great concern to local authorities and ratepayers in Wales, despite the fact that we have a higher rate in terms of domestic rate relief.
However, I shall leave to the Under-Secretary of State for Wales the arguments in justification of the higher rate of relief if he feels that justification is necessary.
I wish to express the strong concern of local authorities at the present situation. The Association of County Councils considers these proposals to be
grossly inequitable and totally unacceptable".
Those are strong words for a normally restrained body, as the association undoubtedly is. The Welsh Counties Committee tell me that all their worst fears have been realised, yet again we see London benefiting at the expense of the county councils, including those in Wales.
As we have heard, the basis of this charge is that although London's share of the needs grant next year will rise, by 12·2 per cent. the overall share of Welsh counties will fall by 3 per cent. London and other large conurbations have major problems, but so do other areas with far fewer rateable resources. London's share of the total needs grant next year will be 21·6 per cent., yet London's share of the total population of England and Wales is only 14·3 per cent. I share the view of the Association of County Councils that this difference is far larger than can be justified on the ground of need.
The hon. Member for Woolwich, East referred to the problem of homeless persons, and we all know that London has a high proportion of such people. The hon. Gentleman will also know that the legislation on homeless persons provides that those who are made homeless in London but who come from other areas should be returned to their areas of origin and local connection.
The decision to pay London extra grant means a reduction in the grant that is otherwise payable to the counties. In Wales this means that every county will suffer to a greater or lesser extent. According to the Association of County Councils the total loss of grant amounts to £7·5 million in Wales, the equivalent of a 1·8p rate.
The highest loss, of £1·3 million, will be suffered by the county of Clywd, which has one of the highest unemployment rates in the kingdom, and by my own county of Gwynedd, which was referred to by the right hon. Member for Anglesey (Mr. Hughes) and which has the lowest average of personal income in the country and the highest population of elderly people. It will also suffer a loss of about £1·3 million. The loss in Powys will be the equivalent of a 4·2p rate, and that will be the highest loss of any county in England and Wales.
I am extremely disturbed that throughout this debate we have found that there is a difference of view between the Department of the Environment and the Association of County Councils about these figures. We have heard the Government's comments on the ACC figures—which are rather more pessimistic than

the Government's figures—but it is only fair to read the ACC's comments on the Department's figures. It said:
It is an artificial figure and in particular does not include most of the gain in grant shared by the London authorities. These figures understate the real size of the grant loss outside London and overstate the size of grant gains outside London, and overall they understate the gains of the London authorities. The 2p safety net has been applied to these figures.

Mr. George Cunningham: If one wants to obtain as accurate and comprehensive a picture as possible of the difference between, say, Powys and London, should not the hon. Gentleman tell the House that the average domestic ratepayer in Powys pays the highest rate to the local authority, which is £40·16 a year—and that is a quarter of the average London figure? In fact, it is less than a quarter.

Mr. Roberts: The hon. Member for Islington, South and Finsbury (Mr. Cunningham) has been making that point throughout the debate. I can add to his knowledge by pointing out that the average domestic rate payment in Wales is about £62 compared with the sort of payments of which we have been hearing, of £113 in the non-metropolitan counties and £190 in London. However, I remind the House of what I have said before about my own county of Gwynedd—that it has the lowest average personal income in the entire country; so we cannot compare areas simply on the basis of rate payment.
Of course, it will be argued by the Government that all the counties will receive an increased allocation compared with last year, but the increase on 1977–78 amounts to 1·2 per cent. for Gwynedd, 3 per cent. for Powys, and 4·1 per cent. for South Glamorgan. When these figures are compared with the current rate of inflation, it is clear that ratepayers in those areas will face significantly larger than average increases.
The Welsh Counties Committee tells me that each of the Welsh counties will be faced with the choice of cutting services or increasing rates. Services have already been cut and cut again, and there will be little choice but to put up rates beyond the Government's 10 per cent. guideline. This is at a time when people's financial resources are not keeping pace with such increases.
I hope that local authorities will exercise the utmost restraint, because our people really cannot stand the sort of rate increases that are in prospect. I accept that we receive a high level of domestic rate relief, but there is no relief for the commercial ratepayer, who is undoubtedly suffering badly. Shops are closing and bankruptcies abound in all parts of Wales. This has an effect on the employment situation, and we all know how bad that is in Wales.
I was extremely sorry to hear the Secretary of State say today that he did not intend to impose any limit on the rate increases that might be made by local authorities. I hope that the Government will do their utmost to restrain the authorities from raising rates, at least beyond the 10 per cent. guideline, even though that will probably mean cutting services to the bone, because I am sure that the harm caused by rate increases will be greater than that caused by cutbacks in services.
As the Minister knows, the Government's severe restrictions on local government spending has had a disastrous effect on the house building programme in Wales. It is hard to understand why the Government are so ready to spend millions on devolution, which nobody wants. If I had a suspicious mind, I would wonder whether the cutback in local authority spending was not in some way preparatory to the establishment of the Welsh Assembly, the first task of which will be to review the local government structure in Wales. With the local authorities desperately short of resources and forced to reduce services, the Assembly reviewers will not be short of adverse criticism on the part of the public. We can be sure of that. Yet I cannot believe that the public will be so gullible as to believe that the shortcomings and defects of local government in Wales are due to its structure rather than the state of penury to which central Government seem determined to reduce it.
I am not sure that we can do much about the order. There is little possibility of the Government's changing the shape of the settlement, unless, perhaps, my right hon. and hon. Friends are victorious in the Lobbies tonight. However, there is one thing that we can do, and that is

to make it as clear as possible to the public that the Government are deliberately robbing the rural Peter to pay the urban Paul and that areas of great need such as Wales are being deprived of assistance that is truly due to them.
I hope that the people of Wales will realise that this is the sort of thing that will happen when we discuss the block grant for the Welsh Assembly and that there will be little chance of changing it. The Assembly will have to get on with its allocation as best it can, just as local authorities will have to get on as best they can with the allocation for the coming year unless the Government can be persuaded—as my hon. Friend the Member for Essex, South-East (Sir B. Baine) suggested—to return to the 1977–78 distribution.

8.24 p.m.

Mr. Peter Hardy: We have heard some astonishing speeches tonight from the Opposition, particularly from the hon. Member for Conway (Mr. Roberts)—in spite of his attractive accent—who referred to housing in Wales during the period of this Government in office. The hon. Gentleman should look back to the situation in 1973–74 which this Government inherited and which was frightening. The hon. Gentleman's inaccuracies are dwarfed by his astonishing speeches about principle.
I heard most of the speech of the hon. Member for Henley (Mr. Heseltine) and the whole speech of the hon. Member for Essex, South-East (Sir B. Braine). They were astonishing speeches because the hon. Gentlemen seemed to be suggesting that the Government's rating policy was based upon the outlook for the local elections in London next year. I do not believe that these are relevant factors and, if we are talking about principles hon. Members opposite should note that some of my hon. Friends have longer memories than they enjoy.
In the debate on the rate support grant order on 22nd January 1974, the then Secretary of State—who has not been here for an environment debate since this Government took office—told the House that rate increases for the following year were likely to average 3 per cent. with a maximum of 9 per cent. That was just two or three weeks before the General Election and the House did not have the


opportunity to subject his figures to the searching examination that these orders have received.
It is disgraceful for any hon. Member opposite to talk about principle when the Secretary of State responsible for the Rate Support Grant Order 1974 told the House that the average rate increase would be 3 per cent. and it turned out, as we discovered immediately after winning that election, to be an average of 30 per cent. The House was gravely misled on that occasion and it does not become hon. Members opposite to indulge in talk about principle.

Mr. Ronald Brown: Is my hon. Friend aware that one document that we did not receive in 1974 was a submission from the ACC? The Association, which is working so hard on these orders, was apparently asleep in 1974.

Mr. Hardy: I am most grateful for my hon. Friend's observation. The ACC was asleep then despite the fact that the rate increases in county council areas were larger than those that will result from the current grant settlement. The 1974 order was received with a quiescent and tolerant attitude which the association has not displayed over the much less severe increases that will take place next year.
The arrangements made for county councils in 1974 were very much more helpful to them than to the areas where the need was really acute, especially the inner city areas. There are areas of need and stress in inner cities apart from London, and although my hon. Friends in London have defended the city with diligence and enthusiasm, we who live in the northern industrial towns and in the areas affected by the first stages of the Industrial Revolution are right to be suspicious and concerned and right to remind the Secretary of State that we want a fair share, too.
The hon. Member for Henley compared the situation in April 1978 with that of three years ago. He should have gone back four years to that watershed of local government finance, the first day after local government reorganisation. If the hon. Gentleman compares April 1978 with April 1974, he will discover that the sort of increases about which hon. Members opposite have been screaming are

dwarfed by the immensity of the demands placed upon people in most parts of England. For example, parts of my constituency are very similar in character to the shire counties. Some parts are almost rural in appearance and certainly not obviously urban in character. Yet we are included in a metropolitan area, and the result in 1974 was that villages and small towns in my constituency faced rates demands that brought them up to the city levels. When the hon. Member for Essex, South-East and any other hon. Member complain about rates, they should remember that the 5 per cent. or 7 per cent. that they are talking about now is dwarfed by the demands of 100 per cent. and 108 per cent. which faced parts of my constituency in April 1974.
Conservative Members kept a very low profile at that time. Indeed, so low was their profile that they have begun to emerge in recent months to suggest that responsibility for that change rested not with their Government but with the present Administration. We should not allow that sort of inaccuracy and hypocrisy to be tolerated.
Having defended the Government, it is reasonable for me to say that I am not enthusiastically happy about the rate support grant this time. There has been criticism of the safety net. Even in my deserving and progressive area we shall suffer a little more than we might be expected to suffer under the operation of the safety net. I want the Secretary of State to look at the matter again and ensure that, whether or not we have a safety net, the formula adopted and applied next year will ensure that those authorities which do seek to serve the public and the needs of their area are encouraged to do so.
I have been disturbed to hear hon. Members opposite talking about the savage way in which, they say, services have had to be cut. They know that the services about which they are complaining need not have been cut as much as they have been. We heard the hon. Member for Tonbridge and Mailing (Mr. Stanley) talking about the appalling reductions in education expenditure in Kent. There is a great deal to be said for local government freedom and the block grant system, but if local authorities in parts of Tory-controlled England are not prepared to provide the services and


face the need to increase rates moderately in order to provide them and if their electors will not turn them out and ensure that responsibility reigns, the Secretary of State will sooner or later have to give consideration to specific grants. I would not be very keen on that, because I believe that local government should be free, but it must also be prepared to act responsibly.
It must be said to the ACC that, for all its squealing about the deal given to city areas, the fact remains that three of the four metropolitan districts in South Yorkshire have done worse out of this package than most of the county councils. I would have to go a long way from my home in South Yorkshire before I found a shire county worse placed. Norfolk, Lincolnshire, North Yorkshire, Nottinghamshire and Derbyshire—shire counties all—have all done better than three of the four metropolitan districts in the county of South Yorkshire.
Given that situation, although I can defend my right hon. Friend and say that his settlement is immeasureably more honest than and superior to that inflicted on us by the Conservative Government, it is not perfect. It cannot be perfect unless South Yorkshire has its needs recognised and its policies supported. Its needs are not as adequately recognised and its policies are not as fully supported as we should like. Until they are, my right hon. Friend will have to accept that my enthusiastic support for this settlement will be a trifle qualified. But at least I can acquit the Government of the charge of hypocrisy and dishonesty which came with such odious unction—"unction" is not a bad word to describe the hon. Member for Essex, South-East—from hon. Members opposite. Since they live in an easily recognisable glasshouse, they should be very careful before they throw stones.

8.34 p.m.

Mr. D. E. Thomas: I hope that the Minister will explain, particularly to Welsh Members, why we are still talking about a rate support grant to the Welsh counties in the context of one unitary Welsh settlement. We are moving rapidly towards devolution. The Government have made important announcements about decentralisation of policy in

other sectors, but they have not yet made clear their intention to decentralise the negotiations for the allocation of resources to local authorities in Wales, although I understand that, if and when the Wales Bill is enacted, it is the intention that the negotiations for funding local authorities, which now take place through the rate support grant settlement for England and Wales, will take place between the Welsh counties and the Welsh Assembly. Therefore the Welsh rate support grant will be worked through the block grant.
I hope that the Minister will explain why the Government have not taken the first step towards that situation by paralleling the situation for Scotland and haying separate negotiations with the Welsh authorities and the Welsh counties in settling the rate support grant level for Wales. Until that happens the Government will always be open to the charge that they are not only transferring resources within England away from the shire counties to the inner cities but are transferring resources out of Wales.
I firmly believe in a geographical distribution of resources, if that can be justified objectively. We have had attempts tonight to justify the resource needs and the realistic demands of inner city areas, particularly London. I do not quarrel with the arguments that have been advanced. When the figures indicate a transfer of resources out of Wales, a reduction and loss compared with last year for all the Welsh counties, one is bound to ask on what kind of objective criteria the Government are operating. Can their formulae for distribution and redistribution be accurate?
We are talking about a situation in which income levels in Wales are substantially below the average for the rest of the United Kingdom. The average level of personal income in the United Kingdom was £53 per head in 1975 while the average for Wales was as low as £46.
Other major indicators of income levels of families are given in the booklet "Poverty: the facts in Wales" produced by the Child Poverty Action Group. The booklet refers to a recent Parliamentary Question in which I asked for information on the numbers of families per thousand families living at different levels of


income. Income was expressed as a percentage of supplementary benefit levels. The booklet states:
At every level of poverty income up to 140 per cent. of supplementary benefit, the proportion of families in poverty in Wales exceeds the proportion in England, Scotland, Britain or any English region—with two exceptions. The only exceptions are that the Greater London Council area and South-West region have the same proportion of families not on supplementary benefit but below supplementary benefit level.
That gives us an indication of deprivation in Wales, when 180 families per thousand are at or below supplementary benefit level. In the North-West the comparable figure is 150 families per thousand. Wales has 210 families per thousand with incomes below 110 per cent. of supplementary benefit level.
If we go through all the indicators we find that a third of the families in Wales are living at or below the official definition of poverty level, despite what local authorities in Wales are spending, particularly on their social policies. Overall expenditure on personal social services in Wales in 1974–75 was £11,732 per thousand population, and the figure for the English counties was £9,876. The range of spending in Wales is considerable. Thus, despite the low level of income and despite the poverty in the population, and despite the fact that rateable resources are low, Welsh counties are spending well above average on personal social services.
We have a picture of a high level of social deprivation, taking the income indicators as our main indicators, and a high level of spending by the county authorities on personal social services, with that spending taking place on the basis of very small rateable values and rate poundages. The right hon. Member for Anglesey (Mr. Hughes) referred to Gwynedd, where the product of a penny rate is less than £200,000. That reflects the kind of rate base from which our authorities are trying to work.
As I have said, the right hon. Member for Anglesey has spoken about the position in Gwynedd, so I shall not go into detail about that, but I wish to say a word about the other county part of which falls within my constituency, the County of Clwyd. Clwyd is the county with the highest unemployment rate in Wales, at over 12 per cent. Indeed, it competes only with its near neighbour over the

border, the Merseyside Region, for having the highest percentage of unemployment in the whole of Great Britain. Yet, despite that, Clwyd is to have a substantial loss of resources. According to the calculation made by the Association of County Councils, the loss is to be £1·3 million. However, according to Clwyd County Council's own calculation, the total loss of resources is to be about £1·7 million as compared with last year.
I should like confirmation of those figures, because, when I raised the matter by Question soon after the settlement was announced, the Welsh Office was not prepared to confirm that there would be this loss to Clwyd.
Because the county has such a high level of unemployment, with the deep structural problems of the textile industry and the aircraft industry as well as the decline of the coal industry and the uncertain future of the steel industry, Clwyd County Council is itself undertaking a large number of short-term programmes to combat unemployment. But these programmes cannot be undertaken if total resources to the county are to be reduced in this way. In fact, the effect of the change in total resources coming to Clwyd has already put in jeopardy a number of programmes which the county was initiating to combat unemployment.
Not only do we have Clwyd with a loss on its calculation of £1·7 million compared with last year and Gwynedd similarly affected to the extent of £1·3 million, but there is a loss for all the counties in Wales. This is where my charge stands that there is a net transfer of resources out of Wales. Unless we have a justification for that, my hon. Friends and I will oppose the order. We are not satisfied that the reallocation of resources made in the order is a reallocation based on objective need. If it were, we should support it, because we believe in the geographical allocation of resources. But without that justification we shall oppose the order, and we shall demand that the Government move to a separate rate support grant negotiation for Wales.

8.42 p.m.

Mr. John MacGregor: I am glad to have an opportunity to express the views of the people of Norfolk and since the number of speeches


is obviously restricted, may I say at the outset that the views that I am about to express are shared by all my hon. Friends on the Opposition Benches who represent Norfolk constituencies?
It is true that Norfolk has not fared as badly as many other shire counties have this year. However, that is no cause for comfort to the people of Norfolk and no cause for satisfaction on the part of the Government. I give three reasons for that. First, we are again losing. We are losing 0·3p in rate poundage equivalent compared with last year. I know that the Department of the Environment's figures suggest that we are up by 0·9p, but I believe that that is based on a somewhat disingenuous formula, because the Department does not count a substantial part of the extra needs grant being given to London under the distribution proposals in its table. Thus, in company with other counties, we have lost because of the redistribution to London.
Second, one must take the position over the past four years as a whole. It is certainly true that over that period Norfolk has lost many millions compared with what the position would have been if the formula had not been so substantially changed to benefit London and the other urban areas.
Third, the fact that we have not done so badly as some other shire counties have this year is due, for some extraordinary reason, to the two matters referred to by the Secretary of State today—the reordering of the education position and the labour costs—which quite fortuitously have worked out slightly in Norfolk's favour.
The point is that this does not come about because of any genuine change on the part of the Government to deal with the real problems facing shire counties, and there is no acceptance of the argument that we have consistently put forward about the effects on the shire counties because of this switch in Government grant.
The little bit of extra comfort that Norfolk has this year is due to the technical changes that have been made and has nothing to do with the real problems of the shire counties. Norfolk feels just as strongly as do all the other counties

about the size and persistence of the switch of the grant away from ourselves, and yet again it will face painful decisions this year.
It is clear from the debate that the core of the problem is the regression analysis. I know it has often been said that no one understands how the analysis is done except for one individual in the Department of the Environment, and even he does not know what he is doing, and that would appear to be the case from the debate today.
The Secretary of State's defence was very interesting. He asked what the needs element was for and answered by saying that it was to recognise changing needs. Many of us would feel that the present way in which the formula works out means that it does not recognise changing needs—certainly not fast enough.
The right hon. Gentleman then said that the pattern of expenditure was the best test of need. I quarrel strongly with that view, on two grounds: first, because the pattern of expenditure itself is not an objective judgment. It reflects the decisions taken by councils themselves in the past, and does not reflect future needs or, in many cases, even existing needs on the ground. I accept the difficulties of working out an objective system for recognising existing and future needs, but I think we must agree that the pattern of past expenditure that does not differentiate between spendthrift and prudent authorities is not an objective test.
My second ground follows from that. Unfortunately, despite some of the tinkering changes, the present system still encourages and helps those authorities that wish to engage in much greater expenditure, whether they are spendthrift or just go on spending heavily to meet what they see as needs, as compared with the prudent ones. The prudent and responsible authorities, including at the present time those responding to the Government's demand to cut back on expenditure, are being penalised by the present system. There is therefore obviously something very wrong with the present regression analysis.
My conclusion is that, recognising all the difficulties, there cannot be much doubt that we need a better formula, and not least because we need one that is


understood by councillors, by council officials and by Members of Parliament, let alone the general public. Many suspicions will remain until that point is cleared up.
I said that I wished to be brief, and I shall refer next to two of the main problems facing counties such as Norfolk. These are, first, rural deprivation and, secondly, the fact that we are a substantially growing county. I can be brief, because these points have been made by other speakers who face similar problems.
I hope that those who represent London constituencies will recognise that widespread rural counties such as my own, which have many scattered villages—I have 160 towns and villages in my constituency—have real deprivation problems. Travel is a significant burden and normally much greater than in the inner city areas. Travel to work is a problem, as is travelling to essential services such as doctors, dentists and many others. It comes heavily out of the pockets of individuals, or, if the service is provided by the county council, it throws a particularly heavy burden on that element of costs in the county council's budget. School transport alone features most significantly in the Norfolk County Council education budget, whereas in London there is little requirement for expenditure on school transport.
In the villages the services are particularly sparse. I am not thinking just of local authority services, which are inevitably sparse. I must say to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), who talks about different rateable values, that people in the villages are bound to be concerned and to complain when they see how little they get in return for their rate contribution. There is also the problem about shops. Not only are fewer shops available, but the goods are inevitably more expensive. Isolation itself, for many people—particularly older people—is a real source of rural deprivation that does not feature in any statistics.
The point that also should be stressed is the cost to local authorities, and particularly county councils, of dealing with this kind of rural deprivation problem. I have in mind the cost of getting social service help to people who live over a

very scattered area, the cost of road maintenance, with an enormous number of roads to be covered, of police patrolling and many other things that have been referred to.
I know that the sparsity factor in the rate support grant formula is meant to cope with some of these things, but, because I am still at a loss to understand exactly how it is worked out and because the heavy cost of dealing with these matters, I do not believe that the formula deals properly with the problems of rural deprivation.
Next there is the question of the growing counties. Norfolk happens to be one of the fastest growing in population. We resent the fact that because of the terrific switch of central Government grant away from ourselves we now face the difficulty of providing even static services for a fast-growing poulation. It may be said that we can increase the rates to cope with it. The difficulty about that is that in areas like mine the people have below-average incomes, so an average increase in rates plays a much greater part in an individual's expenditure than in many other areas.
Further, we depend very heavily on small businesses, and frequently it is small businesses that suffer most from large increases in rates. So our local authorities are very responsibly trying to hold down rate increases, but, with a growing population, it makes it much more difficult to provide even static services.
We also resent the fact that we are having to cope, through our growing population, with people coming from areas such as London. We, with a dimishing grant, are providing help to areas such as London, whereas those areas are getting an increase in grant.
We resent the fact that the figures in the rate support grant formula are out of date. Since so much of this is based on the 1971 census and the real increase in population that has come since then, clearly the formula does not reflect the true position.
We are grateful for the fact that now the Department of Education and Science is giving us a fast expanding education building programme to cope with our bulging school population, but the problem is that, as my hon. Friend the Member for Tonbridge and Mailing (Mr.


Stanley) has pointed out, this has substantial implications for the revenue side of the local authority budget in future years, and I do not believe that the rate support grant formula yet reflects that.
Those counties which have increasing populations obviously have above-average expenditure requirements. One would expect that some local authority areas with decreasing populations would, all things being equal, get a declining part of the rate support grant, yet there is no evidence that this is what has happened. I live in Haringey during the week and in Norfolk at the weekend. My wife is a councillor on Haringey council. Haringey is faced with a fast declining school population and there are therefore proposals now before it to close a number of schools. We in Norfolk have a fast-rising school population, yet we do not have a sufficient building programme yet to cope with it.
I realise that the implications of this go way beyond the matter under discussion tonight, because it raises much wider issues, such as the distribution of population policy that we have pursued in the past and what changes we should make now. But it also has implications for the rate support grant formula. We do not believe that we are being fairly treated in that respect.
In conclusion, I share the views of those who have today expressed concern about the way in which we debate the rate support grant, particularly the fact that we debate it retrospectively. I hope that in future we can discuss some of these problems in a less charged atmosphere and try to get to grips with the formula.
The Secretary of State must recognise the enormous dissatisfaction that there is this year—yet again—with the way in which the formula has worked out. He must bring in radical changes next year—a new-look rate support grant formula—to reflect all the criticisms that have been made.
I recognise the right hon. Member's difficulties. It has become obvious from the debate that we all have particular local problems and we are all putting pressures upon him. But unless a fairer formula is properly put before the House, the suspicion will remain that today the

right hon. Gentleman has been wriggling in an attempt to justify an indefensible plan, which has been a cover-up for a blatant piece of gerrymandering which has been brutally exposed.

8.55 p.m.

Mr. Stanley Newens: I listened with care to the explanation given by my right hon. Friend the Secretary of State for the Environment about the way in which it is proposed to apportion rate support grant for the coming year. I am bound to say from the outset that I am no more reassured about the equity and justice of the arrangement than I was beforehand. I hasten to add that my position is somewhat different from Opposition hon. Members. Unlike many of them, I have never demanded across-the-board cuts in public expenditure. On the contrary, I have raised my voice against such cuts and on occasions have withheld my vote on some of the cuts that have been implemented.
It seems that there is something of a contradiction between voicing a general demand for ever more far-reaching cuts in public expenditure and objecting to those that affect one's own constituents. That is the position of many Opposition hon. Members. When I challenged the hon. Member for Henley (Mr. Heseltine), he refused to say whether the counties would get more if there were a Conservative Government. The reason for his refusal is quite clear. It is that they would have been given less.
The only reason for supporting the proposition that has been put forward by the Opposition is that London and various other places such as London might get less. However, I see that as a flimsy reason for adopting that view. I believe that everybody benefits from and is entitled to high standards in public service—for example, education, roads, welfare and housing. It is no part of my case to argue that London should get less, that the global sum should be diminished, or that a larger part of a diminished sum should go to my area.
In many respects the debate has gone the wrong way in that it has sought to divide town from country. It is clear that there are many parts of London that have overwhelming needs and that many other parts of London are extremely


affluent in their conditions. In the same way, there are many parts of different counties that have affluent areas and areas in which there are people with limited means.
Public expenditure, including the rate support grant, should be maintained at a level sufficient to provide an adequate standard of service for everybody everywhere. It is wrong to base arguments on the proposition that London—I hasten to add that it includes the largest run-down inner city area in the country—should have less. That would be totally contrary to any reasonable proposal. My concern is that in many parts of the country, including my own, the rate support grant has been fixed at a level that is inadequate, which means that there will be serious problems for those living in such areas.
As my right hon. Friend pointed out, the aim has been to continue to exercise restraint on the growth of expenditure in the form of the rate support grant. However, owing to the formula that he has adopted, the restraint and cutbacks involved fall with greater force on many county councils, especially those in the Eastern Region, of which Essex is one.
In 1978–79 the county councils' overall share of the total needs element in the rate support grant will fall by 31 per cent. The loss suffered by Essex will be 7·9 per cent. as compared with the 1977–78 grant, which is greater than that experienced by any other county except Kent.

Dr. McDonald: Does my hon. Friend agree that that is because, unfortunately, people do not realise that in many parts of Essex there are rapidly growing towns or, as in the case of my constituency, there is a rundown industrial area with extensive land dereliction problems, with people living on low incomes and in some cases suffering from poor housing? If the Government were properly aware of these problems they would look to the needs of Essex as well as to the needs of London, since I agree with my hon. Friend that we do not want any alteration at the expense of inner city areas.

Mr. Newens: I entirely agree with my hon. Friend. She underlines some of the points that I have made. The situation in which Essex in 1978–79 will be one of the hardest hit counties is not new. The hon.

Member for Cambridge (Mr. Rhodes James) is present. He is aware that Cambridgeshire was very hard hit last year, and unfairly so. There is a considerable body of evidence to demonstrate that the needs formula does not provide justice for counties with rapidly increasing populations. That is the case in much of East Anglia, a situation which has been referred to by the hon. Member for Norfolk, South (Mr. MacGregor).
On that basis I consider that Essex has had a very unfair deal. The effect can be seen by comparing parts of Essex with contiguous metropolitan areas. The rate burden on properties almost identical in character and a few miles apart is very different. For example, people living in a property in the Epping Forest district will be much harder hit than those in a very similar property across the Greater London boundary in Redbridge. That is totally wrong, because by no means could Redbridge be regarded as having the same problems as other parts of London, such as Hackney and Islington, have to cope with. That demonstrates how wrong the present formula is.
Figures given to me by my hon. Friend the Under-Secretary in reply to a Question that I tabled showed that during the period 1973–74 to 1977–78, Essex County Council budgeted expenditure trebled, but the needs element as a proportion fell from 66·2 per cent. to 33·7 per cent. in those years. I have no wish to justify the cuts which have been made in the services in the county of Essex. On the contrary, I have consistently opposed them, as did the Labour Party in the May elections.
But it must be said that the system is most unfair and it means that whichever party is in power in Essex, it faces an unreasonable burden and problem. I make it clear that I do not agree with the manner in which the majority party in Essex has tackled many of these problems, which is by going ahead with cuts which I regard as totally wrong. But one cannot fail to recognise the serious problem which exists.
My right hon. Friend the Secretary of State has tried to stem the growth of inequality by means of the safety net. That accepts a loss to the equivalent of a 2p rate, and that may not be a total loss.


The resources element is quite inadequate, on the basis of the calculation I have seen, to redress the balance. I emphasise that I am not asking that other areas particularly London, be cut back. But there is a need for some additional help to be given to hard-hit counties such as Essex.
It is ridiculous to suggest that every resident of Essex lives in affluence, and it is not good enough merely to promise further adjustments next year. In a period of pay restraint and rising prices increases in rates are a considerable burden on all citizens. The rating system at the best of times is a very unjust method of raising local taxes, and I think we are entitled, particularly on the Government side, to ask as Socialists for fair shares for all. At the present time, despite the safety net, the system does not provide for this.
I am very deeply concerned for all ratepayers who, without regard to their ability to pay, are to be saddled with new burdens. As the Member for Harlow, which covers the Epping Forest and Harlow, I am particularly concerned about my own constituents. I therefore appeal to the Minister to give further consideration to the injustice which is being perpetrated by the present system and to provide some additional help, of to consider how it can be provided, even at this stage, to those counties which are hardest hit.
Make no mistake about it: Essex has on this occasion been very hard hit. In the long run, I believe, as one who opposed the block grant when it was first proposed, that the present system should be scrapped and replaced by a system which is far more easily understood by all, including—as the hon. Member for Norfolk, South said—Members of Parliament, members of councils and the public at large, and a system which is also more equitable. Until that is done. I believe that we shall never succeed in avoiding these continual feelings of injustice which are generated on every occasion that we have a new decision on the rate support grant.

9.7 p.m.

Mr. Robert Boscawen: My right hon. and hon. colleagues in the county of Somerset share with me the

grave concern about the punishment being meted out again to our shire county. In essence, the needs element of the rate support grant is less than half what is needed if it is to match the Government's highly optimistic figure of inflation. Even if the Association of County Councils' figures are wrong, a growth of 3·9 per cent. for 1977–78 in the needs grant is a long way from cushioning the effect of a 9 per cent. increase in inflation, and who is optimistic enough to say for certain that we shall get that 9 per cent.? There was little comfort in hearing from the Secretary of State that but for the safety net the cuts which will follow or the increases in rates will be more severe.
I entirely agree with the many hon. Members who have said that the shortcomings of the "regressive analysis" system ought to be put right. I strongly suspect that one of the reasons they have not been changed before is that it suited the Government to see that the shire counties are the milch cows for these are the areas where the Labour votes are fewest. What does it matter to them if a few areas such as Essex or Anglesey, in which there are Labour Members, suffer in this way? It helps the cover up. In the main it will not be the Labour seats that suffer.
I find it sickening to hear from the Secretary of State that no blame is to lie on him or on the Government if the shire counties decide to cut their services rather than raise the rates. The choice is not as simple as that. In our county we have already run down our balances almost to danger point. We have increased our rates above the average level for the shire counties in the past two years—by more than 20 per cent. the year before last and by 15 per cent. last year. Our county authority has already tempered the cuts that it has had to make to the minimum by means of savings and reductions in staff. Even so, great dismay has been caused amongst our constituents by the authority having, for example, to withdraw concessionary fares for transport on school buses. Concessionary transport is very important in an area such as Somerset, where parents are worried about their children walking along dangerous, narrow lanes that were never built to take the heavy lorries which now pound along them.
There are many spheres in which serious cuts are affecting the quality of life of people who live in Somerset. Domiciliary care and residential homes for the elderly have suffered considerably in the past year or two. We are sadly conscious that our spending levels per head of population are lower than those of the majority of other counties.
At the same time, we have to say to the Minister that we start, as do other shire counties in the West Country, a long way behind urban areas of the country. We start less well developed than some of the rural areas, too. Services are more expensive to provide in our Western counties which are sparsely populated, with long distances between villages and high road mileages. So often today our county roads have to bear the heavy transport delivering goods to the inner urban areas about which we have heard so much. We have to bear the cost of that, too.
Somerset receives large quantities of tourists who pass through, and these are costly to a county such as ours. The area is one also in which considerable numbers of elderly people have chosen to retire in the last 20 or 30 years, for the very reason that the rates were not particularly high. They went there because they thought that in their retirement they would settle and live there in a reasonable state of comfort, only to find the inexorable effect of inflation pushing up the rates year after year, which means they have to eke out their lives sometimes in a most miserable existence.
What is the choice facing a county such as Somerset? It can continue to increase the rates. It could well be that this year we should have to increase the rates by 18 per cent., 19 per cent. or 20 per cent. to prevent further cuts in services. This adds to the number of bankruptcies amongst small businesses, it adds to the numbers of young people who find it difficult to obtain employment in our area, and it creates a reduction in the number of jobs available. Alternatively, our county will have to take other severe steps to cut into essential services, such as reducing the teacher-pupil ratio. We already have one of the worst teacher-pupil ratios in the country. That is one of the only spheres left in which there can be really substantial cuts, if we are forced to make them. So it will be this or

it will be a bleak outlook this year for the ratepayers of our county.
It is high time that the system of calculating the needs element was changed in order to take more account of the difficulties faced by a county such as Somerset. We are in the South-West, an area in which wages are, and always have been historically, lower than in most other parts of the country. There are thus grave doubts about the fairness of the system.
There is growing bitterness about a system which encourages spendthrift urban areas. There is growing doubt and anger over the lack of awareness which apparently exists in the Department of the Environment about the difficulties and the extra costs involved in living in rural areas. Men, women and children do not live in the lap of luxury in counties such as Somerset. With the vast increases in the cost of transport in the past few years, it is difficult for them to travel about, for in our county transport is a disaster area. It costs some of my constituents £2 or £3 to hire a taxi to get to the doctor. The heating costs, too, for elderly people are enormous in the high parts of the county. Those are the extra costs from which we suffer. That is why we find the Government's deliberate discrimination against our part of the world such a scandal. We hope for the day when a Conservative Government will redress this situation.

9.16 p.m.

Mr. Michael McGuire: I want to take up one point brought out in the debate before beginning the main part of my speech. Some of my London colleagues may have, wittingly or unwittingly, received the impression that we do not recognise and understand the deep and difficult problems with which they have to contend. They may, perhaps, have got the impression, which I want to dispel, that we in the Northern Region where we have our problems, want to take money from them. Nothing could be further from the truth.
I agree with many of the comments of my hon. Friend the Member for Harlow (Mr. Newens). The gist of what he said was that we should not deal with any area as an entirety. There are special problems within an area, whether we are


talking of towns within London or districts in Essex, which should be dealt with on a separate basis and should receive special help. That brings me to the case—

Mr. Steen: rose—

Mr. McGuire: I have hardly begun. I very rarely interrupt the speeches of other hon. Members and I should like to get out a few sentences. When I get the feel of my argument, I shall probably give way.

Sir Bernard Braine: I gave way to the hon. Gentleman.

Mr. McGuire: I know that I interrupted the speech of the hon. Member for Essex, South-East (Sir B. Braine). I apologise. I told him that we were not yet on television. His was a marvellous act. If it had been televised, he would have got 10 marks out of 10 for his performance and would have been singled out for a promising career. I interrupted him mainly because he was implying that the rate support grant was a political initiative on the part of my right hon. Friend who was seeking to reward his supporters. I wish to make the case that many areas represented by Labour Members will suffer.
I come to the effect of these orders on England and Wales. I represent a constituency that is divided into three parts, the biggest of which is in the new metropolitan borough of Wigan. We shall be very badly done by as a result of the orders. I cannot understand why the metropolitan borough of Wigan has not been given special help to deal with its problems. In my constituency, I have the old townships of Ince and Platt Bridge. These towns have some of the worst housing conditions in the country, if not the worst. In his policy statement on the inner cities the Secretary of State laid down the measuring stick for Government help to towns and cities to tackle the problems. The Wigan metropolitan borough should have been given special help under this policy.
I wonder what will happen when the citizens of my constituency get their rate demands. The people who worked out the policy are absolutely incensed. Those who will receive the rate demands will

find that these will contain increases of not less than 20 per cent. and their anger will bubble over. I wrote to the Secretary of State about the unfair discrimination against the Wigan metropolitan borough and the tone of that letter will be like a love letter compared with the one that I shall send him.
The Secretary of State has forecast that the average increase in rates should be in single figures. I realise that if it is about 8 per cent. or 9 per cent. some areas will be above that and some will be below. However, I do not think that a 20 per cent. increase should occur in an area such as the Wigan metropolitan borough.
I cannot understand why we have not been given that special help. Apart from one ingredient mentioned in the White Paper and other policy statements, we have almost a microcosm of the community qualifying for help. The missing ingredient is that we have hardly any ethnic minorities of immigrants. I wish to quote from paragraph 17 of the policy document for the inner cities. It says:
Even though individually the majority of people may have satisfactory homes and worthwhile jobs
collective deprivation
arises from the pervasive sense of decay which affects the whole area through the decline of community spirit …
The document goes on to list poor housing and social and industrial dereliction and so on.
In the metropolitan borough of Wigan and the two towns that I have mentioned many of the problems for Wigan have been inherited as a result of local government reform and it has not been given resources to deal with them in a sensible way. Mostly within these two towns we have 3 per cent. of the total derelict land area of the United Kingdom. That means that 24 per cent. of the land area in these towns is derelict. More than 21 per cent. of the children receive free school meals.

The Under-Secretary of State for the Environment (Mr. Kenneth Marks): My hon. Friend might like to know that the subject of derelict land is dealt with under a different grant. Only recently the Government launched a scheme in the Wigan metropolitan county borough aimed at clearing derelict land, and the cost was £1 million. All that money will be found by the Government.

Mr. McGuire: I am grateful to the Minister for mentioning that. Every hon. Member whose constituency contains derelict land will be grateful for 100 per cent. grant. However, there are certain on-costs to be considered, which are not provided for and have to be met. However, as the Minister said, it is a considerable sum.
When we examine the criteria laid down in regard to the various grants, I wonder why the Wigan area has not been given enough help. Let me outline one area in which help has been lacking in my area. The House might be surprised to learn that a total of 21 per cent. of the children in my area receive free school meals. I am told by educationists that once an area goes over the 5 per cent. figure in respect of free school meals, it is regarded as having big problems. I repeat that the figure in my area is 21 per cent. Furthermore, 18 per cent. of the houses in the area—most of them substandard—lack a fixed bath. We also have a high proportion of single elderly people. The other factor I have already mentioned in the area is the considerable land dereliction.
If we do not qualify for assistance in these respects I should like to know why. A good part of my constituency is situated in the metropolitan borough of Wigan and we have enormous problems on our plate. If we are to receive special help, the Wigan metropolitan borough will be the authority that will have to be given it. I understand that Wigan will receive a sum of £78·7 per head of population, whereas the average for the metropolitan districts is £97·4. In other words, Wigan with all its problems comes thirty-first out of 36 districts.
There are 10 boroughs within the Greater Manchester Metropolitan County and nine of them in one way or other will receive special help. Wigan is again outside in terms of such assistance. seven of those boroughs receive aid under the urban renewal programme relating to inner cities. The three towns which are outside are Wigan, Bury and Stockport. Even more curious is that Bury and Stockport will gain as a result of these provisions, but Wigan will not.
I shall draw my remarks to a close, Mr. Speaker, because I see that you are transmitting extra-sensory messages to

me to the effect "Michael, I should like you to wind up." I will oblige you in meeting your unuttered request.
The White Paper to which I have already drawn attention says that the key to good local government is a prosperous community. When the House realises the final figure to be given to my area it will take the view "Do not give us any special help. Ince has made an overwhelming case that help must go to that constituency." But that help must go to the metropolitan borough. Wigan is surrounded by new towns or areas with special development status.
My hon. Friend the Member for Wigan (Mr. Fitch) has consistently, regularly and forcefully put our case when he has led various delegations, of which I have been part, to a whole host of Ministers. He has put the case for Wigan—a case that is unanswerable and should now be conceded without a deputation. Wigan's unemployment rate is more than 9 per cent. The average unemployment rate in Great Britain is 6 per cent. and in the North-West 7 per cent., and yet Wigan enjoys the lowest form of grant aid status. It is surrounded by towns that attract and enjoy higher development status and the jobs that Wigan must have if it is to become a prosperous area. On that account alone we should have special help. We cannot understand why this discrimination persists.
I want to make a final and special plea to the Government. I believe that the figures that I have given are accurate. No doubt the Miniser will check them, although I am assured that they are absolutely accurate. I receive such figures from officials and extrapolate them from various sources. They are as authentic as they can be. I ask the Minister to look again at the special needs of Wigan and to remove this burning sense of injustice, because this is the last straw that breaks the camel's back. The people are making this plea through me. We have special problems and we need special help to deal with them.

Several Hon. Members: rose—

Mr. Speaker: Order. I am trying to fit in a speaker from every county as best I can, and I am concerned that there should also be a speaker from an urban area on the Conservative side. I know


that hon. Members have co-operated, but we have only an hour and a half left for Back Bench speakers.

9.32 p.m.

Mr. Anthony Steen: This is an opportunity for me to speak for one of the major urban conurbations in this country—Merseyside—and to dispel the belief that may have been gained from speakers on all sides of the House that it is the shire counties that are being discriminated against in the Government's plans for rates for 1978–79. That is far from true. A great many urban areas are being discriminated against, too. I hope to show, briefly, that Merseyside and Liverpool in particular have done extremely badly.
It may well be that many of my hon. Friends and hon. Members opposite who represent Liverpool constituencies are not here tonight because they have been blinded by the Secretary of State's footwork. It is quite brilliant. The right hon. Gentleman is probably in the wrong job and should have gone into the ring. He would have done a good job there because, for all his huffing and puffing, for all his statistical formulae and mathematical calculations and his taking on and his taking off of his glasses, he can not conceal that the percentage rate grant is a matter of straightforward political judgment.
The Secretary of State has made his judgment in favour of the Labour areas and away from the Conservative-controlled areas. That is the conclusion of his policy. It may be that the right hon. Gentleman did not intend that, but that is how it has worked out.
I should like to look first at the needs element. The right hon. Gentleman has reduced the needs element for the shire counties from 58·3 per cent. in 1974 to 51·9 per cent. next year. Most urban areas appear to have benefited, but many actually have not. I suspect that the Secretary of State has been too clever by half and that there is an enormous smokescreen that he has blown across such areas as Liverpool to mislead everyone into thinking that he will benefit. Nothing of the sort is so. Liverpool will actually receive less.
The arguments are compelling. There is the decline in population, reduced rate

base, and mile after mile of areas of so-called urban deprivation. However, the Secretary of State sheds crocodile tears, because he is construing the inner city to include parts of such areas as the constituency of Garston, which is five miles from the city centre. There is complete despair among those in the inner city area. It is absolute nonsense to suggest that the right hon. Gentleman is concerned about inner cities. He is concerned about urban areas in the hands of Labour hon. Members.
Let us take the example of the local authority mortgage scheme in Liverpool under which our constituents can buy older houses in the city and get loans to improve them. In 1974–75, that scheme stood at £3·7 million. People could buy houses in the inner area, and this is what the Secretary of State has said that he is so concerned about. But this year there is only £50,000 left in the scheme. The right hon. Gentleman has therefore turned to the building societies in Liverpool and said that they should lend on the older houses. But the right hon. Gentleman has misunderstood the problem. He has said that the building societies should make available money for pre-1919 houses, but it is the pre-1893 houses in Liverpool that are ready for improvements.
The Secretary of State said at the Habitat Conference in Vancouver that we must pension off the bulldozer in Britain. Here, again, those are crocodile tears. He has no intention of doing that, because what he has done in Liverpool through the reduced funds for buying and improving older houses means that all that will be left in years to come will be for them to be bulldozed. However well-intentioned he may be the Secretary of State must be schizophrenic. What is happening in Liverpool will eventually mean the demolition of inner area housing. This is curious, because Liverpool has been subject to more Government investigations on urban deprivation than anywhere else in Great Britain.
Three or four years ago, one could not walk more than 200 yards without stumbling on one of the Government schemes or the professional social workers and research workers who were running them. One stumbled first on the urban aid programme projects, then the community development teams. A total of


£150,000 was allocated for neighbourhood projects, there were educational priority areas and inner area study teams—all within four years. One would have thought that the city would now have tremendous prosperity and, with special development area status, be on the road to recovery.
Why is it that life in Liverpool and many other major urban areas has not improved? The Secretary of State is doing a simple conjuring trick. While distracting attention with a flurry of activity, partnership agreements, urban aid programmes and all that jazz, he is taking away the whole base of finance. In 1974–75 he reduced the local authority funds for improvement grants from £4·9 million to £1·5 million.

Mr. Marks: The hon. Gentleman started his speech by saying that under the order Liverpool would be worse off, but he has talked entirely about something which has nothing to do with the order. Will he now tell us how much Liverpool gets this year in needs element of the grant and how much is proposed in the order?

Mr. Steen: I am just coming to that. The Minister will see the equation of what is happening. There has been a reduction in improvement grants from £4·9 million to £1·5 million. Local authority funds for loans to purchase have been reduced from £4·7 million to £1·1 million. Council house improvements have been reduced from £11 million to £9 million and the net result is that Liverpool is £12 million worse off.
That is on the negative side. Let us look on the positive side. It was the Minister's declaration that he would make available £50 million for five inner city areas through the partnership agreements over a period of two years. That means £10 million for each of these areas—£5 million a year for two years. That is the answer for Liverpool—£12 million lost on one side and £5 million gained on the other. The claim, therefore, that Liverpool will be better off is a mere smokescreen. The idea that Liverpudlians will benefit is complete nonsense.
Again, the pound is now worth 60p compared with what it was in 1974. Thus, the Government have not only

made a reduction from £12 million to £5 million for Liverpool but have changed the value of the pound, making the value of the money much less. What relevance therefore, is the Department's claim that next year, through rate support, there will be £300,000 more for Liverpool? It all amounts to £300,000 more in one way but £12 million less in another. The Secretary of State is trying to create a grand illusion in the metropolitan areas such as Liverpool that all the urban areas are going to be better off. The truth is that most of them will be worse off, some of them being as badly off as the shire counties.

9.42 p.m.

Mr. Ronald Brown: The hon. Member for Liverpool, Wavertree (Mr. Steen) tried a three-card trick. Such a trick is tried in the markets of London quite frequently, and the people who do it get short shrift. The way in which the hon. Gentleman concocted the figures fascinated me. I have one figure which he left out. The North-West Region will get more than £12 million from the European Regional Fund.

Mr. Steen: Not much.

Mr. Brown: The hon. Gentleman may not think that it amounts to much, but my borough would certainly love to have part of it. It is one area for which there is no regional fund. The Northern Region is to get nearly £42 million from the Regional Fund, while London, an area which should have money from the Fund in order to refurbish its industry, is getting nothing. The hon. Member may cast aside the £12 million for the North-West as being little or nothing, but London cannot take such a view.
The tragedy of the debate has been the Opposition's concentration on London, trying to make out that London is doing very well. My hon. Friend the Member for Woolwich, East (Mr. Cartwright) showed how so much of the information being given by hon. Members opposite was ill-founded. Whether they get it from Conservative Central Office or the Association of County Councils, which is the same sort of place and which produces the same sort of information, I do not know, but the information was false, as my hon. Friend demonstrated.
The clawback through the rate support grant settlement was in order to ensure that people like my constituents should have the same level of cash increases in their rate bills as do ratepayers in other parts of the country. I cannot understand why it should be argued by the Opposition that that is improper. The result of this attempt to ensure that my constituents pay only the same sort of increases as people in other parts of the country is that London is going to lose only £270 million. Last year, we lost £403 million. That means that we are losing £673 million over two years.
I was waiting patiently for Conservative Members, particularly the hon. Member for Essex, South-East (Sir B. Braine), to explain which parts of their areas were losing £673 million in two years. None of the Opposition Members could inform me. I now challenge those on the Opposition Front Bench to say which of the areas they represent are losing £673 million in two years. I noted, incidentally, that Scotland is receiving £33½ million from the European Regional Fund while London is receiving nothing.
Some hon. Members are opposing this order on the basis that London is apparently getting too much. My answer to them is to ask why they think any area should be forced to give up £673 million. They had better be able to justify it.
There has also been a continuing argument about regression analysis being wrong and that it is time to reform it. Many of us in London have been arguing this case for a long time. We have done everything to argue that what we thought was an unjustified system should be put right. However, we never received a ha'pence worth of support, with the exception of the absentees tonight. Those absentees were very good when they had to come to help us. I think that it was at election time, so they could not afford to stay away. They were the hon. Member for Hornsey (Mr. Rossi) and the hon. Member for Hampstead (Mr. Finsberg), who are now known as the Opposition spokesmen for London. [HON. MEMBERS: "Where are they"?] I suspect that the hon. Gentlemen are keeping a low profile, as they say in news stories. They helped very much to argue the case, but nothing was ever done.
The voice that was most muted was that of the Association of County Councils, which is now called Tory Central Office. Nothing was coming from the ACC, which was satisfied with the situation. London was losing thousands of millions of pounds over the years, but nothing happened, and the Opposition Members could not care less. It ill behoves them now to start making raucous noises about what they call an unfair situation when they were unwilling to put right the injustices that were probably clear to everyone who wished to understand them. Opposition Members have not done themselves any credit tonight.
The hon. Member for Henley (Mr. Heseltine) regaled us well today. He has also disappeared, and is keeping a low prifile. In a typically poor speech, he warned that the position had been deteriorating in the past three years. The hon. Gentleman was very happy to sit watching my constituents and other constituents in London paying for his constituents in Henley. He was quite satisfied. Because that injustice is being put right—not wholly, but slightly—he regards it as a deterioration.

Mr. Molloy: Does my hon. Friend recall that when the counties were not doing too badly and Greater London was suffering considerably we heard nothing from the Association of County Councils? Yet when my right hon. Friend's proposals had been adumbrated we had the supposedly independent, non-political Secretary of the ACC making a broadcast that was so non-political and so independent that if he ever became a Member of Parliament he would immediately be plonked on the Tory Front Bench. These people should not masquerade—

Mr. Speaker: Order. Is the hon. Gentleman intervening or addressing the House?

Mr. Molloy: With respect, Mr. Speaker, I have to address the House to intervene, or intervene to address the House. I think that my hon. Friend has made a very important point. Some of us are getting a little tired of these officials, who pretend to be apolitical but, when they get a little angry, reveal themselves as the Tories that they are.

Mr. Brown: I am obliged to my hon. Friend thought that he was about to point out that in this debate, during which London has come in for the maximum of strictures, we have managed, with Mr. Speaker's help, to which we pay tribute, to have two speeches only from London Members. I find that somewhat offensive, since there are 92 London Members and I feel that our share should acid up to a bit more than two in a debate of this kind, when London is being upbraided by the rest of the House. I therefore have much in mind the point made by my hon. Friend.
The hon. Member for Henley went on to object to one group of people, as he put it, having to pay for another group. How he was able to reconcile that with the fact that my constituents in the Hackney area of London and people in London as a whole were paying for his constituents in Henley—which he was quite satisfied about—I could not understand. But that is the sort of lunacy that he exhibits from time to time.
I am intrigued to know the views of the right hon. Lady the Leader of the Opposition. She is a London constituency Member. Are we to understand that she underwrites what is said by the hon. Member for Henley when he calls for a greater clawback from London in order to satisfy Henley? I should like to know whether that is the view of the right hon. Lady the Member for Finchley (Mrs. Thatcher), because, in her absence tonight, without evidence that she has disowned her Front Bench spokesman, we must understand, given that she will be in Government at some time in the future, that she will take further money away from London. That is the message which we take tonight from the antics of the hon. Member for Henley.
The hon. Gentleman then indulged in a carefully rehearsed antic with his hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), who put to him much the same sort of point as that just made by the hon. Member for Wavertree, suggesting that all this is a political plot, that the Secretary of State is moving money out of Tory areas into Labour areas, and that is what it is all about. As this went on, I intervened to point out that the hon. Member for Henley was again up to his trick of telling fibs, but,

as he did not properly take the point, I had better explain what I meant.
Again taking the case of London—I stick strictly with London—it was said by the hon. Member for Bury St. Edmunds that all the London boroughs which got the biggest increases were Labour boroughs. Richmond, regrettably, is not a Labour-controlled borough, and Richmond has a 123 per cent. increase. Sutton, also not yet a Labour borough, has a 106 per cent. increase. Bromley, which we all know is not a Labour borough, has a 103 per cent. increase. I come next to Tower Hamlets, in my right hon. Friend's area. He will not be delighted to hear from me that his area received only a 72 per cent. increase.
I asked the hon. Member for Henley to withdraw what he said. He refused to do so. I have now shown how he has been guilty of calculated inaccuracy. I do not wish to call it untruth, though I suppose it must be. There was such an effort made to prove the point, but it is plainly wrong.
Very little has been said about the additional burdens in London. I listened to the hon. Member for Conway (Mr. Roberts), who came, made his speech and went away. He is not here now, either. But he told us about the problems of Wales. Let me tell him a little story. I was the recipient of a letter passed to me by a Conservative Member of Parliament—a letter which he had received from one of his constituents, a civil servant, complaining bitterly about the Labour Government, about Labour Members of Parliament and about everyone in general. Apparently, his daughter was in my constituency and she was not getting all her fair due. This gentleman had complained very strongly that it was all the fault of the Labour Administration.
I made inquiries about the case and I then asked to see the young lady. It transpired that she had come from Swansea or Cardiff—it does not matter where—and had arrived in London. As I say, daddy was a civil servant. En fact, she was dossing—squatting—in one of our council flats, which should have been used by a family desperately in need of housing in our area. There she was, sleeping on a palliasse in that flat. If the hon. Gentleman has to export his problems, I suggest that there are many other boroughs to


which he can send them. He can send them to Richmond, Sutton or Bromley, and he can do so with great pleasure, because they are to receive the maximum increase.
It has been depressing to hear the inability of the Opposition to mount a campaign tonight. The rate support grant is a difficult thing to bring together. We know that it is difficult to construct. At best it can be only rough justice, and I think that this year my right hon. Friend has tried desperately hard to be fair and just. I do not believe that the fact that London is to lose £673 million is particularly just, but, nevertheless, my right hon. Friend is trying very hard to be fair. He has our support, and we hope that next year we shall be able to do even better to make sure that there is full justice in the RSG.

9.56 p.m.

Mr. Arthur Jones: I shall not, if he will forgive me, follow the hon. Member for Hackney, South and Shore-ditch (Mr. Brown) along the lines and the devious paths that I suspect he has walked about his beloved London. We always respect the views that he mirrors of this great city, but I think that he has not reflected the main action that has been brought on this debate tonight. It lies in the criticism that has been directed towards the arrangements under the RSG calculation. I think that that has been the main burden of our debate.
I am aware that the Secretary of State is cognisant of the difficulties involved in implementing the RSG arrangements, the complications of the system, and the difficulties that exist in its interpretation, but the criticisms that have been directed to the arrangements show that serious consideration will have to be given to the future of these arrangements.
I think it is admitted that an annual review of the allocation of the various elements that comprise the rate support grant needs to be considered, but whether the existing criteria are sufficiently well understood and reflect the various problems facing the differing parts of the country is questionable. When one considers the remarks of the right hon. Gentleman about rate levels, it is questionable whether the views that he reflects and the opinions that he has expressed are possible of interpretation.
In the Press notice that the right hon. Gentleman issued on 18th November he said:
Current expenditure is effectively at the same level as in the 1977/8 settlement. It provides sufficient resources to ensure that overall authorities need not make further cuts in spending programmes.
I recall that the right hon. Gentleman emphasised that point earlier today. He went on to say:
I expect average domestic rate rises attendant upon this settlement to be within single figures.
I think it has been demonstrated, without contradiction, that that will not be the case for many rating authorities this year.
The right hon. Gentleman said that the average may be within single figures, but for many authorities it will be double. He seemed to be a little irresponsible in terms when he said that it will be up to the rating authorities to demand the additional resources they need through their local levies. There is some contradiction in what he said in those two respects.
No allowance is made for continuing inflation for those counties which face increased population. I questioned the right hon. Gentleman about this during his speech, when he said that allowance was made within the rate support grant procedures for increased population. I am still in doubt about that. In North-amptonshire, for example—a rapidly expanding county—if expenditure on current services were to continue at present levels it would increase by no less than £9 million, £7 million for inflation and £2 million for growth to meet additional population. I am informed that the Government grant offered towards this additional expenditure is £200,000. North-amptonshire is therefore faced with circumstances which require ratepayers to face an increase in the rates of about 17 per cent. if services are to continue at present levels, and that calls into question the Secretary of State's attitude.
In reply to a recent Parliamentary Question arising from the Secretary of State's provision—as he put it—of a "safety net element", the object of which is to ensure that no local authority will lose more than 2p in the pound as a result of changes in this year's distribution as compared with last year's, the right hon. Gentleman was very guarded in what he


said to me, which is on the record. He said:
The safety net will ensure that no authority will lose more than 2p in the pound.… The comparison is not based on the share of grant which individual authorities received in 1977–78, since this would fail to take account of changes over the past year in circumstances which were relevant to the 1977–78 settlement."—[Official Report, 13th December 1977; Vol. 941, c. 153.]
So I think that what has been elicited on the subject of the safety net of 2p in the pound is not quite what we understood was the Secretary of State's intention originally. My conclusion is that the sentence in that reply does not convey the same assurance as we were led to understand in the right hon. Gentleman's original statement.

Mr. Shore: The point I should make clear is that, whatever doubt there might have been in the minds of hon. Members, there could have been no doubt in the minds of the Association of County Councils, whose officials were brought into the discussion at the earliest stage affecting the 2p safety net, so there could have been no possibility of misunderstanding on their part.

Mr. Jones: I understand the point that the Secretary of State is making. I understand that he has to take the decisions at the end of the day. Although the type of consultation is one thing, it is another thing to admit that at the end of the day the Secretary of State has to take decisions and has to require the rating authorities to conform to his ultimate decision. This is inescapable. It does not do to maintain that the matter has been done by agreement or that the Association of County Councils or the Association of District Councils was aware of what was in the Secretary of State's mind. It is not easy as that. It is one thing to engage in consultations it is another to recognise that at the end of the day the Secretary of State determines the eventual proportion of the rate support grant settlement.
The now widely used expression "regression analysis" is a statistical technique used to determine the relationship between a number of variables. As for the rate support grant calculations, the variables tend to be inter-related and therefore the analysis requires to be extended to cover the relationships between these variables. This is what I

think the right hon. Member for Anglesey (Mr. Hughes) was trying to get at.
I have had a note from the Library which tells me that the complicated mathematical methods that are involved in the rate support grant arrangements are not particularly covered by the expression "regression analysis", but require the added words "multi-variate regression analysis" because of the incredible complication of the rate support grant computation procedures. It is that which strikes fundamentally at the arrangement.
The rate support grant has served its purpose for a number of years—I believe that it goes back to 1971—but we must reconsider the criteria that are used and their application. It is recognised that the rate support grant relates to past council expenditures, and it is clear that it is here that the substantive criticism of the system lies. The prudent and careful are penalised and the profligate are provided with perhaps unmerited additional resources. That is something that the right hon. Gentleman recognises. He says that it is difficult to get away from it. Who is to take the decision in the absence of the criteria that are used in the rate support grant procedures? I suggest that we need closely to consider the rate support grant and to consider improved and more effective methods of distributing this vast sum of public money.
I welcome that which is set out in the second paragraph of Appendix F of the order, as it contains an admission on the point that I am trying to make. The paragraph states:
The technique identifies a quantitative relationship between the per head expenditure of local authorities and the incidence of various need and cost factors.
It is the expenditure where the emphasis lies, and it is that that we need to examine in future. Is the need not in terms of expenditure but in anticipation of the requirement of the particular local authorities? I am less confident in the statement that reads:
The relationship derived represents the collective view of local authorities and their ratepayers on the spending needs of authorities, as conditioned by national statutory requirements and central government advice.
That is the point that I was trying to make earlier. The whole thing turns


on central Government advice, and that is where the dictation of the terms that the Secretary of State requires to be implemented is made effective. It underlines that the judgment at the end is left—properly so under the arrangements—to the Secretary of State. I think that the right hon. Gentleman leaves himself open to some of the political questions that have been asked. For example, it is sometimes suggested that he may be using the grant procedures to achieve political objectives. I think that he is trying to deny that, but at the end of the day the responsibility rests with him, and it is difficult for him to avoid such questioning.

Mr. George Cunningham: Does the hon. Gentleman recollect, three or four years ago, was it, that the previous Administration used all the methods that it could to work out a good impartial system for distributing the rate support grant? Did it not then fight shy of implementing it and decide to impose a political judgment on top of that to shift resources at that time from the cities to the rural areas? That was the previous Administration, which quite explicitly imposed a political judgment on top of the impartial statistical examination. Nothing like that has occurred with the present Administration. Instead, what has been done is to change the statistical methods perfectly impartially and objectively to try to recognise more of the needs of inner cities than have been previously recognised.

Mr. Jones: The hon. Gentleman is not usually accused of whitewashing, but I am afraid that I must make the accusation now. He has given no evidence in support of his contention either that the Conservative Government were responsible for a political judgment, or that the present Government are white.
It is out of character for the hon. Gentleman to make such allegations. He is usually so well documented that he does not allow his argument to rest on unsubstantiated evidence. I am surprised that he has allowed that to happen tonight.
The hon. Gentleman has in no way supported or helped the argument that I am trying to make. It could equally apply to an Administration of any complexion.

It is far better for the Secretary of State to be detached from the allegation that he is using a political judgment in the distribution of the rate support grant. I contend that it should rest on much more substantial criteria. There is a judgment, but the decision under the present arrangement lies so firmly in the hands of the Secretary of State that he finds it difficult to avoid the accusations that are sometimes made.
Education demands about 60 per cent. of total expenditure, and additional emphasis has been given to social factors in recent years. This is set out fully in Appendix F of the order. Persons whose homes lack basic amenities and lone-parent families have been selected in three years out of the last four in each case. I find it difficult to see how factors involving such widely divergent judgments can make any realistic contribution towards expenditure by one authority or another. There is no national adjudication on the needs of differing parts of the country in this respect.
For many years local authorities, particularly those faced with substantial population expansion, have drawn attention to the fact that the rate support grant procedures make no allowance for this factor. The Secretary of State said that he did make an allowance for it, but my information is that this is not the case.
The factors listed on page 21 of the order refer to population decline over 10 and five years, respectively, but, as I recall, nothing has been suggested to provide that an allowance should be made for a rising population figure. I understand the difficulties of anticipating such a figure, but some judgment in this matter is required.
Population decline leads to reduced expenditure, although phased over a period of years. But the same attention does not seem to have been given to the necessity of increasing services where increased numbers require provision. I shall be glad to know whether the Secretary of State and perhaps, the Minister who will wind up, have any information in this respect.
I do not think that this is the occasion to go into any further detail over the rate support grant, but the unsatisfactory nature of these present arrangements must be challenged.

10.13 p.m.

Mr. Bruce George: I intend to be brief, Mr. Speaker. Speeches from Conservative Members have been characterised by disparaging remarks towards my right hon. Friend the Secretary of State. In the last four hours or so he has been accused of making judgments in favour of Labour areas, of being too clever by half, of manipulation, of lack of principle, of unfairness and inequity, and of being guilty of blatant political gerrymandering.
There are enough delightful phrases there to keep many an editor of a local newspaper happy for the next couple of days. But we on this side realise that no one has a monopoly of honesty. The House cannot be divided into those who are honest and those who are dishonest, and we need no lesson in political morality from Members of the Conservative Party.
I should like to refer to an incident involving the Conservative Party in my area. This concerns a meeting that took place on 23rd November. The person who has written to me on this is a very good friend of mine who is a West Midlands county councillor for Kingshurst and Chelmsley Wood, which is in the Meriden constituency. That person is Mrs. Renée Spector. She attended a meeting of the West Midlands County Council and of the Staffordshire County Council which was examining a number of draft modifications to the Secretary of State's structure plan for Staffordshire.
This joint meeting was attended by the West Midlands County Council planning committee chairman and vice-chairman and the other two Conservative members of that committee. On the Staffordshire side the chair was taken by Councillor A. G. Ward, the chairman of the county council. Also present were Mr. Jones, the vice-chairman of the county council, Mr. Brown the chairman of planning, Mr. Bowen the vice-chairman of planning and Mr. Lightbown, vice-chairman of policy and resources.
The officers at one stage were asked to leave the meeting, but, unfortunately for those present, Councillor Spector was

not asked to leave. She was a new councillor and I presume that most of the Staffordshire members did not recognise her. She took extensive notes of the meeting. At the meeting the members discussed housing policy in the council area in Staffordshire and in the West Midlands county, particularly the North Bloxwich housing development in the Walsall, North constituency. Incidentally, the county council in the West Midlands does not allow its officers to make statements of any kind to the Press and apparently does not like them even to attend meetings, for the reasons that I shall explain shortly.
At this meeting Councillor Lightbown made the point that the county council needed to be very careful about housing strategy. It was stated that there was a Member of Parliament in AldridgeBrownhills who could be got out if the right sort of development took place. It was said that Walsall, South was vulnerable, that the balance of Lichfield and Tamworth could be altered, and that the balance of power in the parliamentary seats along the borders of the county could be quite dramatically changed if the wrong sort of development took place. In this meeting Councillor Lightbown said that South Staffordshire could be quite dramatically altered—

Mr. Peter Rees: On a point of order, Mr. Speaker. May I seek your guidance? Is it in order to discuss a whole range of planning decisions in the Midlands, such as the hon. Gentleman is presently doing?

Mr. Dennis Skinner: On a point of order, Mr. Speaker. I think you will have noticed that my hon. Friend the Member for Walsall, South (Mr. George) is attempting to illustrate not only that the Tories in the West Midlands are involved in gerrymandering but that the result would also he that rate support grant factors would be influenced.

Mr. Max Madden: Further to the point of order, Mr. Speaker. Earlier in the debate my hon. Friend the Member for Swindon (Mr. Stoddart) was referring to the reluctance of district councillors sometimes to incur the infrastructure costs caused by new housing developments. He called attention to the


relevance of this within the rate support grant settlements and negotiations. The matter to which my hon. Friend the Member for Walsall, South (Mr. George) is now referring is very germane to that sort of consideration which takes place in all local authorities.

Several hon. Members: rose—

Mr. Speaker: Order. The hon. Member for Walsall, South (Mr. George) had undertaken, I believe, to speak for five minutes. I have no doubt that he will not count the time that has been taken by points of order. I know that everyone in the House is anxious for other colleagues to have a chance to speak. I have been tolerant and that is why I did not pull up another hon. Member earlier, because I knew that he would restrict his speech to a very few minutes. The rule is, of course, that the subject matter must be related to the rate support grant.

Mr. George: I hope that the jutification of what I am seeking to raise has been made by other hon. Members before me. In regard to housing policy, it was said, as to Wolverhampton, South-East, that the odds should be weighed carefully or that seat would be jeopardised as well. As I indicated earlier, it was said also that South Staffordshire could be altered quite dramatically. It was said that Staffordshire would change its political balance if this type of development was persisted with, as the north of Staffordshire votes Labour and the party could not afford to lose the seats in the south as well.

Mr. Robin Hodgson: While I share the hon. Member's concern that the people of Walsall should have adequate housing, I point out that the development north of Bloxwich will go on valuable agricultural land as opposed to derelict land which is available within the borough. Secondly, the building would be on green fields which provide the only lung, the only open space, for people in the north of Walsall between Walsall and Cannock.

Mr. George: I have been stating the arguments that the officers were putting forward, when they were allowed to be present, about the cost of the infrastruc-

ture of the north of Bloxwich development, but when the officers were thrown out they got down to the real reasons, political reasons, why they did not want the development. Councillor Lightbown went on to say that the Conservative Party must be very careful about the choice it made. It was said that the Conservatives must build private houses in Aldridge-Brownhills and Walsall, South and that this would alter the boundaries considerably. It was also said that any housing to be undertaken should be for private sale wherever possible.
This was the kind of argument put forward at this planning committee meeting which, to my mind, was more like a joint meeting of the West Midlands Conservative Party. Will the councillors be paid the expenses which they incurred in attending this meeting, which was blatantly political?
I shall not comment on the wisdom of making a statement such as that made by Councillor Lightbown when there were strangers present. That is his problem. It may be that I am naive, but I assumed that planning decisions should be taken on rational and impartial grounds. In this case the grounds borne in mind appear to have been more of a conspiratorial exercise in political gerrymandering of the very worst kind.

Mr. Speaker: Order. The hon. Member must speak about the support grant now. I have been very tolerant. I allowed the hon. Gentleman much more than the five minutes for which he asked.

Mr. George: Thank you, Mr. Speaker. I really had thought that it was germane to the debate this evening.
In conclusion, I ask the Secretary of State to inquire into the circumstances of this meeting and to judge very carefully the decisions emanating from the West Midlands County Council Tories and from the Staffordshire Tories in relation not only to the development north of Bloxwich, but to any other planning proposal as well.

Mr. Hugh Fraser: On a point of order, Mr. Speaker. The hon. Member for Walsall, South (Mr. George) made a number of very serious allegations. In fact, the meeting called with the Ministry was attended not just by Conservative members but by Labour Members for North


Staffordshire. I was present at the meeting. The issue was raised by the county council as a whole, both Conservative and Labour members.

10.21 p.m.

Mr. Geoffrey Pattie: My constituency is in the county of Surrey, and I speak in this debate on behalf of 10 of my hon. Friends with constituencies in that county.
Last year, our county was the worst hit of all the county authorities in the country. We have now ceased to have that rather dubious privilege, although we have lost £3 million in the forthcoming rearrangement.
I do not intend to talk about multiple regression analyses or needs elements. All that I wish to say about the system is that it no longer reflects adequately the needs and that it penalises the prudent authorities.
If the Secretary of State and any members of his departmental staff came to my constituency in the county of Surrey and met a random selection of my constituents, they would learn that my constituents regard it as something of a sick joke that now, apparently, they are the new rich and the inhabitants of a shire area which is to be raided each year to have its resources transferred to an inner city area.
It is not that people living in the county of Surrey think that there are no problems in London. We know very well that there are, and we wish to see measures taken wherever posible to alleviate them. Flow-ever, there is the implication in the way that this measure is drawn that there are no problems in a county such as Surrey and that it is populated entirely by people with numerous motor cars, swimming pools and all manner of modern conveniences.
However, we actually have children in care. We have a great many old people and we have a heavy concentration of mentally handicapped and mentally ill people. We have a lot of homelessness because of the high cost of housing We have a high incidence of alcoholism. I do not know why that should be peculiar to the county, but it seems to be. We have a high proportion of one-parent families. But the implication comes across to the people living in the county

of Surrey, who are given the impression by a rate assessment in this form, that they are being raided in order to put right the situation in the inner cities. That is not the way to tackle the problems of the inner cities.
It seems that Surrey has experienced the same kind of cuts as those referred to by my hon. Friends from Kent and Essex. We have had exactly the same problems, and we have had to make the same reductions in our services.
I wish to say on behalf of my hon. Friends from Surrey that it is time to draw the line. This must be the last year—and I pray to God it will be—when we shall have a formula that is devised in this way.

10.25 p.m.

Mr. Gerry Fowler: I promised to be brief, and I shall make my points in rather staccato form.
Let me defend my right hon. Friend the Secretary of State for the Environment against the charge that this settlement is determined merely by his consideration of political advantage. My right hon. Friend is well aware that there is a high concentration of Labour marginal seats—not in the metropolitan areas or in London, but in the fringe areas situated in the shire counties to which people have moved from the conurbations in recent years. Those seats in general determine the results of a General Election.
My seat was once an example in that category. I am not sure that it is now and, indeed, I hope that it is now a fairly safe Labour seat. I noticed my hon. Friend the Parliamentary Secretary to the Privy Council Office was in the Chamber a few moments ago, and we all know that he is the Member for Rugby. That is an apt example for the purposes of my argument. Has he benefited from this settlement? That would not appear to be the case, and I feel that any action by my right hon. Friend on the lines suggested by the Tory Party as appropriate to his party political advantage would not win elections for him and his party.
We all know that in the inner cities there is a high concentration of social problems. Equally, we must also admit that historically resources have been maldistributed between county and inner city areas. I am not sorry that there has been a switch in recent years in order


to correct the historical imbalance. Personally, I hope that the process will not go very much further. I am here as the Member representing the Wrekin, but also as a ratepayer in the Wrekin and in Westminster. I would say from my experience that the balance is now much nearer to correction, and I do not cavil at the switch of resources in the last two years.
The second point I wish to mention has been raised in various forms and relates to the regression analysis. Many people have said that the difficulty of that analysis is that it penalises the prudent and benefits the profligate. My point is different. I wish to advance the argument that it penalises the historically stingy, the socially irresponsible authorities, and benefits those that have shown their social responsiveness in the past.
Let me take my own county of Shropshire in terms of its social services. I wish to quote some figures used recently by the director of social services for that county. He makes clear in a Press report which I have before me that the county's estimated budget for the social services is 73 per cent. of the figure for England and Wales as a whole. Shropshire will spend only £12·18 per head of population on social services this year compared with a national average of £16·69.
He goes on, using the same basis of expenditure per head of population, to quote examples from specific services. Shropshire spends 28p a head on day centres for old people, compared with the national average of 83p. It spends £1·39 a head on home helps, compared with the national average of £2·02. It spends 29p a head on residential care for the physically handicapped, compared with the national average of 49p, and 49p on care for the mentally handicapped compared with 71p.
Why has this come about? Certainly not because of the rate support grant settlement of the last few years, but because the county is dominated by independents of the old-fashioned sort, and Conservatives of the rather more modern sort, whose basic principle is to cut public expenditure. These Conservatives believe that public expenditure is undesirable and that whatever money can be saved should be saved.
One of the weaknesses of the multi-variant regression analysis is that it perpetuates the problem. I hope that the Secretary of State will look at this and make a fresh start on a fairer basis. I can see the case that my right hon. Friend was making earlier about the difficulty of making assessments other than on this basis. However, I hope he will consider the possibility of trying to make a new effort to undo some of the damage that has been done by such authorities in the past.
I received a letter today from the county education officer for Shropshire protesting against a statement I made, oddly enough. I was surprised at this, because I check all my statements thoroughly before I make them. He thought that the county was doing very well on discretionary grants for further education because it was proposing to cut them only by £29,000 in absolute terms next year. Taking account of inflation, this is a cut of more than £29,000—it is a cut in real terms of 13 per cent. of the sum spent at present. Even assuming that the county was giving one discretionary grant in further education per 1,000 of the population—a pretty poor percentage—the sum spent per discretionary grant will be only £180 a year.
What does one do with an authority like this? It is no good saying that we put in what we can through the rate support grant and leave it to the discretion of the authority. We must go further than revision of the format and look again at the possibility of certain specific grants for essential services being provided by local government.
The formula at the moment does not take sufficient account of the needs of areas of rapidly increasing populations. This is particularly the case in my area—in Telford—and it brings with it a whole host of social problems. There is specific help for new towns, and I concede that happily. It helps to redress the balance, but goes only part of the way towards doing so.
In my new town I have schools in which, for example, 53 per cent. of the child population come from broken homes. I have another school with a high concentration of immigrant children, which most people would not believe was


possible in lovely rural Shropshire. There is also a high incidence of social problems and broken marriages. But throughout the area the standard of social services provided by the Shropshire County Council is below the national average, even in terms of areas without a high incidence of such problems.
I therefore hope that the Secretary of State will look again at he problem of areas of expanding population and particularly those areas where the population that is coming into the area brings with it a variety of social problems that may hitherto have been alien to that authority. Indeed, they may have been not only alien but beyond the experience of the authority whose task it is to deal with them. I notice that the hon. Member for Bromsgrove and Redditch (Mr. Miller) who has similar problems in his constituency is nodding—so that I am making a non-party point.
Much of this debate has been wasted with scoring cheap political points. The Secretary of State has done what he could in the circumstances this year. The formula is inadequate and needs revision, but that is not the fault of the Secretary of State. Pray God we can get away from petty, party political squabbling in attempting to solve the means of supporting the local authorities upon which every one of us depends so much.

10.37 p.m.

Mr. Dudley Smith: This has been a remarkable debate. It has lasted seven hours and there are still many hon. Members who wish to speak. One can look back to the sixties when the rate support grant debate was a formality, held late at night and only certain hon. Members who were interested took part in it. It became extended to a quarter of a day's debate and then to half. Now today we have had a full parliamentary day and not everyone who wished to speak could be satisfied. This underlines what other hon. Members have said—that there is something seriously wrong with the whole matter of the rate support grant and the system.
I have sat through seven hours of this debate today and there has been a stream of criticism. Some of it has been political and directed against the Secretary of State and the Government, but most

of it has been against the system. We have heard from hon. Members on both sides of the House who represent, for example, Liverpool constituencies, as well as hon. Members from the shire counties. Of all taking part, only two hon. Members spoke in favour of the Government's decisions and they were both representing London constituencies which will do very well out of this settlement. Apart from that, there has been general and consistent criticism.
The debate has underlined the essential unfairness of the rating system overall. Reform should have come years ago and I blame successive Governments for that. The burden of rates should not be an argument between the shires and London, but about a balanced system between citizen and citizen, the residents of inner areas, towns and the countryside. It should be based on the ability to pay and generally applied across the population.
There are many old people, childless couples and others on low incomes but not sufficiently low for them to qualify for rate relief. These people are being asked more and more to bear an ever greater burden in this matter.
I have heard that there is a silly rumour going round that my party is not now quite as keen on rating reform as it was once. I believe that that is all that it is and I hope that the Opposition spokesman tonight will declare that we are as keen as ever to reform the rating system. Some of us have campaigned for years to get the rating system reformed and we shall continue to do so until the Government, of whichever party, does so and grasps the nettle. Given the hotch-potch of the present system in an inflationary age, it is undoubtedly true, and no impartial person who has listened to this debate from the Galleries today could be in any doubt whatsoever, that the counties are being hammered cynically and unfairly.
If I have one particular criticism of hon. Members opposite who have spoken it is of the attacks made on the ACC. The Association is a reliable, responsible body and it considers the proposals to be grossly inequitable and wholly unacceptable. Many of its criticisms are shared by the Association of District Councils. These are expert, professional people and there is no doubt


that those who study these matters realise that this year's grant leaves a great deal wanting.
It is clear that the formula has been adjusted to favour London. The shire counties once again lose most heavily, thus continuing the trend which started in 1974–75. There has been a lot of special pleading. I do not want to make a particularly special plea for Warwickshire, because there are so many Warwickshires. A total of 39 counties are doing very badly as a result of the grant, and Warwickshire is the sixth hardest loser. It will have to tighten its belt and increase its rates. It is not a plush, rich area such as Surrey. It has some desirable parts, but it also has a high percentage of lower than average incomes and people in trouble who need help from official sources.
There is more politics than attempted parity in what the Secretary of State is trying to do. I received a letter yesterday from a constituent who implied that he may have been a Labour Party member once and said in regard to the rate support grant:
I have never understood why the Labour Party, supposedly the party of social justice, seeks to maintain this system among many other inequities.
That view would be echoed by many others. Perhaps it is too much to ask the Secretary of State to think again and to draw up a new formula for next year. I imagine that the right hon. Gentleman will, by then, be back at the drawing board in Transport House at the start of a lengthy period in opposition, but if he is still in office, I hope that he will look at this matter again and try to do something about it. If we are in power by that time, I hope that we shall already have embarked on the desperate need to reform the whole rating system.

10.43 p.m.

Mr. Hugh Jenkins: I am glad that the provision for libraries, museums and art galleries allows for a slight increase in the volume of expenditure as new facilities come into use. Before the grant is fixed, discussions take place between all Departments. Arts Ministers have come in for severe criticism in the past, and my successor has not been immune from it, but he has done well to get an increase this year.
Libraries are an important part of our public life and it is desirable that they should be given the opportunity to expand. They have many new requirements falling upon them, including the development of the loan of cassettes gramophone records and so on.
Another good point is that the settlement provides an increase in police officer manpower and the number of police civilians and cadets. There has been a lot of argument on this point and it is a good thing that this provision has been included. These are non-controversial matters to which I am glad to draw attention.
There seems to have been misguided criticism about the relationship between London and the rest of the country. What is being done in the order represents simply a reduction in the largesse that London distributes to the rest of the country. To hear some hon. Members opposite, one would think that the opposite was true. All that the Minister has done is to make a long overdue redistribution in favour of London.
Even now, under this procedure, all that the Secretary of State does is to make an arrangement which allows for London's domestic rate bills to increase by the same cash amount as the average elsewhere. That is all there is to it. From the Londoner's point of view, since he is proportionately so out of line with the rest of the country, since it is so much more expensive in rate terms to live in London, the readjustment is not enough.
There can be no question of my right hon. Friend having done some political manoeuvring to benefit Labour authorities. A long overdue measure of justice has been introduced here. My right hon. Friend lives in my constituency, in the borough of Wandsworth, and Wandsworth has done slightly less well than the rest of the London boroughs. If he is being over-cautious about doing well for Wandsworth, he and I and the rest of my constituents have to pay for his over-caution.

Mr. Newton: Would the hon. Gentleman agree that one of the problems here is that the definition of London appears to be crude? The hon. Member for Harlow (Mr. Newens) and others have pointed out that at the edges—for example, between Redbridge and the rural


parts of Essex—people are better off than those on the other side of the border. We need a less crude instrument to bring aid to the inner areas of London.

Mr. Jenkins: This instrument is not crude but highly complex. We cannot get away from its complexity because of the basic nature of the rating system. We are saddled, until we choose to alter it, with a single regressive form of taxation. It is highly unpopular. Every local authority is confined to its rating formula, and until we get away from that and permit local authorities a wider range of money-raising abilities on their own account and look at our whole method of financing local government, we cannot get away from the complexity of the system and from the inequalities which, however careful one is as between one authority and another, must necessarily arise. Eventually, as the system gets more and more complex, the House—both sides of it—will find itself forced to the conclusion that at long last we must look at the whole method of local government financing and fundamentally reform it.

10.48 p.m.

Mr. Tim Sainsbury: It is a pity that the Secretary of State, who attended this long debate very well, was not present to hear the hon. Member for Putney (Mr. Jenkins), because he would thus have heard the only speech in the debate which nearly got to being uncritical of the order. Just at the end, some criticism—in which I follow the hon. Gentleman—did creep in when he said that the whole system was unworkable.
In seven and a quarter hours of debate, the best that the Secretary of State has heard has been London Members saying "It is not good enough" and the hon. Member for Rother Valley (Mr. Hardy) saying "One bad order deserves another". It is not surprising, in view of the ingredients of the order, that the right hon. Gentleman is so universally held to have done a bad job. Nor is it surprising that he has been accused of exercising political judgment instead of a genuine judgment of needs. Given the instrument that the right hon. Gentleman has, he would be more saintly than perhaps any other Member were he able totally to resist the temptation to interpret the figures a little to political advantage.
What is the first element of the rate support grant? It is the domestic element. No explanation has been advanced as to why there is twice as high a domestic element in Wales as in the rest of the country. The late Mr. Anthony Crosland said, in a debate on the rate support grant:
The result of this decision, I fully concede, is very rough justice, with a strong element of the capricious about it."—[Official Report, 25th March 1974; Vol. 871, c. 55.]
Later, on 12th December, he said:
The basic reason for the wide margin is that the cost both of local government reorganisation and water reorganisation was much greater in Wales than it was in England."—[Official Report, 12th December 1974; Vol. 883, c. 789.]
It seems that the Welsh are taking a very long time to sort out water reorganisation and local government reorganisation if, four years later, they really merit twice as high a domestic element as the rest of the country. There are other parts of the country that are just as badly off on those grounds.
The second element of the rate support grant, which concerns more than £2,000 million, is the resources element. As has been pointed out, this extraordinary element is an absolute invitation to an authority to spend more money. I think that the Minister will be aware that some authorities will actually receive more taxpayers' money than ratepayers' money for every additional penny in the pound that they levy. That is a total incentive to spend more money.
I refer the Minister to something with which I hope he is already familiar, the authoritative report on the distribution of the rate support grant by Richard Jackman and Mary Sellars of the Centre for Environmental Studies, which dealt very satisfactorily with this point. The report pointed out that
Grant mechanisms could snowball, with an increase in grant leading to an increase in costs leading to further increases in entitlement and further increases in expenditure and so on.
That analysis had a look at what we get from the resources element.
The other defect of the resources element is that it is based on the fallacy that one can compare realistic rateable values in one area with the rateable values in another area. That is not true. It is not true of commercial properties


and is even less true of residential properties.
I hope that the Secretary of State and his team are familiar with Table 8 on page 158 of the Layfield Report, from which we see that if we compare the rates on entirely similar three-bedroomed semi-detached houses, and if the rateable value in Wales is indexed at 100, by the time one comes to the South-East an identical house has a rateable value of 157, and an identical house in London has a rateable value of 225, nearly two and a quarter times as great. Therefore, we have a resources element put on rateable values which are not comparable, as well as being an invitation to local authorities to spend more.
Most hon. Members have concentrated their criticism on the now generally decried and disgraced multiple regression analysis method of allocating nearly £4,000 million handed out in the needs element. It might be suggested that it is a little late in the day to turn to what is perhaps the most profound criticism of multiple regression analysis, which is that it suffers from multicollinearity [HON. MEMBERS: "What?"] I invite the Secretary of State to explain how he has dealt with this. It is a very simple thing, with which I am sure hon. Members are familiar. When one adds one form which is closely related to another form, one ends up achieving the reverse effect of what was expected to achieve, because of the effect of the first factor on the second factor. Multiple regression analysis is totally riddled with multicollinearity, and I hope that it will rapidly prove fatal.
There are many other criticisms that I could make. My hon. Friends the Members for Henley (Mr. Heseltine) and Daventry (Mr. Jones) have both pointed out the inadequacy of the data base. We can see this if we look at two or three elements in particular.
Incidentally, before we leave the statistics perhaps I ought to draw the attention of the House to the coefficient of variation from the average rate poundage, because it is generally accepted—indeed, the Secretary of State has told us—that the purpose of the needs element formula is to compensate authorities with particular spending problems so as to prevent an

especially heavy burden falling upon the rates.
The House will readily realise that if this was working we would find that the variation from the norm in the rates would be reducing, but if we look at the coefficient of variation we find that it shows no signs of circular conversions at all—in fact, on the contrary. So, on a statistical basis, one can firmly say that the alleged purpose of the needs element is not being realised.
If we look at the factors, that is perhaps not surprising. Let us consider lone-parent families. It is right that they are given a much heavier weighting this year and the year before. The weighting is based on the 1971 census figures of a number of lone-parent families, from which I can only conclude that the Department of Environment does not study the Finer Report. Had it done so it would have found a note from the DHSS which is reprinted in Appendix 4 on page 79 of Volume II. It says:
Census methodology is unsatisfactory for identifying unmarried mothers living with their children. Both the 1966 and 1971 analyses understate the probable number of unmarried mothers.
Thus we have a factor given special weight which has already been found, even on that very out-of-date basis of the 1971 census, to be totally unrealistic.
When we come to persons living in housing lacking certain amenities, we find that, in spite of a housing division survey having been carried out in 1976, that factor is still being based on the 1971 census. As the Secretary of State in an answer to me, has already projected a further fall of 57 per cent. in the number of unsatisfactory houses in the country, I should like to ask how much money is being paid on non-existent amenity-lacking houses because of his use of out-of-date factors.
Perhaps the worst of these factors is the third additional factor to which I should like to refer, and that is factor (i)—pensioners living alone. Surely everybody in the House would accept the number of pensioners living in an area to be of major importance in determining the amount of rate support grant that might be required, yet the only factor that we find on this subject is one for pensioners living alone, and that is down-weighted this year and is, of course, based on totally out-of-date figures


Nothing is given for those amongst the elderly who have the greatest need—the over 75s. In East Sussex there are more people over 75, and over 65, than there are in any other county. Therefore, it is not surprising that we find that East Sussex has lost £4·1 million in grant because of the down-grading of the rate given to the factor relating to pensioners.
The reality is that both by political decision and by the effect of the higher spending by the cities as a group the regression analysis has been shown to have failed totally. The outcome has been the direct result of persisting with the regression approach, and, as that same CES article finds, it is an increase in the cities' expenditure rather than any real increase in needs that has gained them the additional grant.
I started by referring to the late Anthony Crosland, and I end the same way. He said:
The revised formula produced by my predecessor represents a considerable improvement on any previous formulae … but it is still far from perfect and I shall want to look closely at how it works out."—[Official Report, 25th March 1974; Vol. 871, c. 50.]
I hope the House will agree that, after the debate today, we cannot wait another year to find a better answer.

11.0 p.m.

Mr. William Molloy: We have to acknowledge that the hon. Member for Hove (Mr. Sainsbury) is red hot at reading tables and mustard at quoting extracts from other people.
The point made by the hon. Hember for Warwick and Leamington (Mr. Smith) was a good one, like that made by his hon. Friend the Member for Chertsey and Walton (Mr. Pattie). We have to acknowledge that even in the so-called wealthy areas in the counties, like Surrey and Warwickshire, there are elements of poverty and hardship among those we tend to think of as fairly wealthy. The House would be remiss not to acknowledge that. It also proves that even in the midst of plenty one can have poverty, but that is part of a political problem which cannot be debated tonight.
I also agree with the point made by many hon. Members that the rate support grant debate has attracted a great deal of attention, either because hon. Members believe that the grant is unfair to the

counties and favours London, or because, like me, they take the reverse view.
Some of us start with a little knowledge of the matter, having been involved in London local government for 25 or 30 years. We appreciate the feelings of county MPs who have never done battle over the last three decades, as we have, in appealing for more justice for London.
The offensive thing which the Secretary of State has done has been to listen to genuine appeals, to examine the facts and to make this decision. The right hon. Member for Henley (Mr. Heseltine) hints at some sort of political juggling by my right hon. Friend the Secretary of State. What neck, and what nerve it is for the Tory Party even to consider that, in the context of the GLC, someone might do a bit of fiddling! The whole GLC and its entire structure are the biggest piece of gerrymandering in the history of this country, so we do not want that sort of nonsense from the right hon. Member, nor from anybody else on that side of the House. It has been acknowledged as a vicious example of a blot on the British political character and it comes ill from any hon. Member opposite to make the foul aspersions which have been made tonight.

Mr. Ronald Brown: Will my hon. Friend note that the Tories on the GLC are involved in another piece of fiddling by setting up something called the Marshall Report and going back to the 1950s and the Herbert Commission? They are trying to do some more gerrymandering, about which we shall hear later in the year.

Mr. Molloy: I agree. It is like an orchestra with one instrument, namely, the fiddle.
There are problems we have not been able to tackle because of insufficient funds. The rating system is wanting, but nobody has found an alternative. We have not tried for any length of time any idea alternative to the rating system. When a Minister is prepared to do that, even for a trial period, even if he fails, his courage will be acknowledged.
The point was made earlier that the economic situation was drastic and that when the United States was seized with a form of political pneumonia for which we are not responsible we had in various parts of our island large chunks of


unemployment. It was the Government's policy to try to reduce unemployment in places like Wales and for industry to be created there and when it could not, for industry to move from Greater London. That has caused enormous problems.
There is no example in the country comparable with what happens in London because of the removal of industry. No place has lost so large a number of apprenticeships as Greater London, and that has had its effect on education. When all this is put together, it is the main burden on the expenses of Greater London area and that burden is larger than that borne by any other part of the country because of unemployment and relocation of industry—

Mr. Michael Brotherton: On a point of order, Mr. Deputy Speaker What has this to do with the rate support grant?

Mr. Molloy: I will deal with the hon. Gentleman. If he cannot see that the problems of the unemployed, of old-age pensioners, of education, and of roads have something to do with the rate support grant, he has no right to be here. He has not been here very long. He might as well go back whence he came.
I am sure that if we had been graced by the presence of the Leader of the Opposition—she is dead crafty; she has not attended the debate—she would have known that what we have been saying from these Benches about London is the truth. She would have known that for decades Greater London has had to put up with being at the bottom of the list for consideration. My right hon. Friend has acknowledged London's difficulties and its status. He has made some endeavour to right a wrong which has existed for far too long.

11.5 p.m.

Dr. Alan Glyn: In the one minute I have available to me I want to make two brief points. Speaking on behalf of Berkshire and all the other county areas, two points are clear to me. First of all, the rate support grant 1977–78 followed by the grant for 1978–79 means that two things must happen. First, there must be a cut in services and, secondly, there must

almost certainly be a rise in the rate poundage.
All that we in the county areas are asking for is some equitable treatment, not that some areas should be treated equally and others more equally.—The whole basis of the criteria and of formula on which they are based should be looked at very carefully. The Minister has gone so far as to agree with that.
Early-Day Motion No. 142, proposed by me and signed by my hon. Friends in Berkshire, spells out what we wish to do in Berkshire and the other county areas. It sets out clearly that this settlement must result in a rise in rates and a reduction in services. In Berkshire's case the Government have said that we should lose £1 million, the ACC has said that the figure is £2·3 million, and I am assured by the county that the figure is probably nearer £3 million. This will result in an increase in rate poundage from 60p to 68p, a rise of well over 12 per cent. Any result on services such as roads, schools or anything else will be directly associated with this order.
I hope that the Minister will do two things—look carefully at the recommendations made in Early-Day Motion No. 142 and, secondly, look at the formulá and the criteria upon which this new rate support grant is based.

11.7 p.m.

Mr. Robert Rhodes James: In the short time that is available to me—although I must point out that I have been present right from the beginning of the debate—I wish to draw the attention of the House to the predicaments affecting my constituency and the county of Cambridgeshire which, as the hon. Member for Isle of Wight (Mr. Ross) pointed out, was most particularly hit by the rate support grant of last year.
There were various other matters that I wished to bring to the attention of the House and of the Secretary of State in particular, but in view of the manner in which the debate has gone I do not have that opportunity, though I trust that on another occasion I shall have the privilege of informing the House in more detail of the very particular problems which we in my constituency face.

11.8 p.m.

Mr. Teddy Taylor: We are debating orders affecting


England and Wales, but understandably, because of the lateness of the hour on Thursday night, most of the debate has been about the position in England. However, the position in Scotland, as the Secretary of State will agree, is equally serious.
The Secretary of State, in introducing the order, said that it was fair and reasonable. A number of things have become clear during the debate. First, the right hon. Gentleman must accept on the basis of all the speeches that have been made from both sides that his view is very much a minority view. The evidence advanced by many speakers with detailed knowledge of local government in the areas demonstrated that the Government's proposals are not accepted as either fait or just. That view has been expressed not just from these Benches, but many of his hon. Friends—the right hon. Member for Anglesey (Mr. Hughes) and the hon. Members for Swindon (Mr Stoddart), for Rotherham (Mr. Crowther) for Ince (Mr. McGuire) and for Harlow (Mr. Newens)—have made it clear that the order is resented and will cause real damage in many areas which are already suffering a great deal.
The first thing that the Secretary of State must appreciate is that we cannot consider the order in isolation. For many areas, including the shires, this is a blow coming after three bad years. My hon. Friend the Member for Ton-bridge and Mailing (Mr. Stanley) made it clear that his county had lost about £25 million over the past three years and many other such examples were given, including that by my hon. Friend the Member for Warwick and Leamington (Mr. Smith). Those who are affected in this way and who have lost a great deal because of the change in emphasis over the past three years would rather resent the Secretary of State's advice that they should not use the occasion of this further cut as an excuse to cut spending on services. The Secretary of State must be aware that the only alternative they have is further to raise the rates, notwithstanding that already for very many they are a very great hardship. Many small businesses, for example, are ending the burden intolerable.
The second argument has been about the needs element formula. Does the right hon. Gentleman accept on reflection

that there is any meaningful relation to need, or is the procedure to reallocate grant merely becoming a vehicle for what amounts to a political decision? We have had many endeavours on the part of the right hon. Gentleman and others to explain the needs formula. A few minutes ago my hon. Friend the Member for Hove (Mr. Sainsbury) gave us a detailed explanation, and he was as difficult to follow as the right hon. Gentleman.
Some of the changes that have been made are difficult to justify in logic. One change has been the complete removal of the unemployment factor. The hon. Gentleman may remember what he said almost a year ago on 22nd December 1976 when he told the House that he was proud of the inclusion of the unemployment factor. He said:
The evidence is that there is a direct relationship between the level of local authority expenditure and the level of unemployment in any given area, and it is because the evidence showed conclusively that there was that relationship that the unemployment factor was included in the formula."—[Official Report, 22nd December 1976; Vol. 923, c. 846.]
What has happened since then? Has unemployment disappeared? Far from it; it has increased further. It is now at about the highest level since the 1930s. However, the unemployment factor has been removed. How can the Minister say that there is logic in these matters and a fair assessment of need?
Another point that has been emphasised time and again by my hon. Friends is that need is not limited to the inner cities. We all accept that they have special problems, but the right hon. Gentleman must accept that bad housing and deprivation are not limited to the inner city areas. As my hon. Friend the Member for Wells (Mr. Boscawen) said, transport problems are not limited to the inner city areas. As my right hon. Friend the Member for Stafford and Stone (Mr. Fraser) emphasised, the problems of expansion and related needs are not confined to the inner city areas. It would be wrong if the whole exercise were based on the principle that need was something limited to the inner city areas.
The right hon. Gentleman has made an assumption that we find difficult to follow—namely, that inflation will be limited to 9 per cent. over the forthcoming 12 months. That assumption is based


on a pay policy that was designed to produce increases of between 6 per cent. and 10 per cent. Surely the Minister accepts that we now have the problem of deferred pay rises, which are almost time-bombs that can provoke an increase in inflation. We have the possibility of two rises for the police, and possibly two for the firemen, in the period that we are contemplating. However, the Minister has made the assumption that inflation will be limited to 9 per cent. for the forthcoming 12 months.
As the Secretary of State for Scotland has said, we have special problems in Scotland. We have the problem of reallocation, which in some ways is made worse by the revaluation that is taking place in Scotland this year. The result of that, as the Secretary of State indicated, is that there will be an even greater shift in the allocation of grant than in England. We find that Lothian could suffer a loss that has been estimated at £6 million. Fife, of course, has many special problems. It could lose as much as £5 million. Most of the areas outside Strathclyde will lose because of the revaluation. We find that industry will be carrying the larger share.
The Minister pointed out that he was cutting down the domestic rates element by a substantial amount because of the special problems facing industry. Does he think that it is wise to put such a massive additional burden on industry when unemployment in Scotland is so high? In both Scotland and England in recent times finance has become a nightmare for both treasurers and ratepayers. They have had the problem of coping with inflation. There has been the problem of obtaining ever-increasing revenue from the rating system, which has been creaking at the seams. I say to my hon. Friend the Member for Warwick and Leamington that the problem is just as bad in Scotland. A recent answer reveals—I think that it was given on 6th September—that rate arrears in Scotland are about £20 million. That gives some indication of how the system is creaking at the seams.
As my hon. Friend the Member for Warwick and Leamington emphasised, we have in the orders an additional problem—namely, that of coping with the

juggling act of the Government that appears to be designed to solve the complex problems of inner city areas by artificially milking other areas.
We accept that action is needed to help the inner city areas, but the repeated milking of other areas is not the way to achieve that. There is no doubt from what has been said from both sides of the House that these proposals will cause great hardship to ratepayers who have already suffered over the past three years. The principles do not seem to be based on justice or need, and the indications are that this order represents a further episode for what appears to have been almost a vendetta against large areas of the United Kingdom. It is time that that vendetta was ended and that grants were based on real justice, not on political expediency, as appears to have been the basis of this order.

11.16 p.m.

The Under-Secretary of State for Wales (Mr. Alec Jones): I recall that on the last occasion when we discussed the rate support grant—in December last year—the right hon. Member for Crosby (Mr. Page) suggested an old boy's tie for the rate support grant club. From tonight's debate it seems that the membership of the club has increased, but there has not been a great deal of unity among the members.
Some of my hon. Friends have welcomed the proposals, and some have criticised them. From the Opposition we have had nothing but criticism. That may be because no London Conservative Member has spoken in tonight's debate.
We have heard the suggestion that certain Opposition Members might vote. That is their right, but I say to anyone who is contemplating such action that it would create a serious situation for local authorities if the orders were voted down. That would produce chaos in local government offices, because the authorities would be unable to plan their budgets. I mention that only to familiarise hon. Members with the consequences of any such action, and I do not seek to prevent them from voting.
A number of points were made to the effect that the cash limit for 1978–79 has been set too low. The cash limit we have set implies an annual increase in costs


affecting local authority current expenditure of just over 71 per cent. However, it takes account of a substantial once-and-for-all reduction in national insurance contributions which, when excluded, brings the annual increase to about 9 per cent. for the year.
Let me just make clear what the cash limit figure does and does not include. It does not include provision for the recent police settlement, since this has been allowed for in the price base for the settlement. It does include provision for other pay settlements.
As to the latest proposals on the firemen, the Home Secretary said in the House last week that the Government would be prepared to contribute through the rate support grant to the cost of the proposed settlement; this undertaking stands. It means that the additional expenditure arising from a settlement with the firemen will be added to relevant expenditure and be eligible for grant. If it is necessary to increase the cash limit in order to meet any undertaking given by the Home Secretary, this will be done.

Mr. Heseltine: What is the basis of the settlement level included in the rate support grant settlement already announced?

Mr. Jones: There has not been a settlement in the firemen's dispute yet. I have indicated how we would react when a settlement was reached and how we would deal with it through rate support grant.
Perhaps I may say a few words about regression analysis. This still provides a reasonably objective picture of relative needs. It is supported by some of the local authorities and it reflects the growing problems of inner urban areas. Since last year's rate support grant debate in the House we have tried to find a genuinely acceptable alternative. We are continuing discussions and inquiries with local authority associations to see whether we can bring this about. I offer a challenge to those who criticise the present formula and who think they can produce a better system of needs assessment: produce it and we shall consider it. If it is better and can be seen to be better, we are prepared to use it.
Let me say a few words about varying data. A number of hon. Members said that population increase should be reflected

in the needs element distribution. It is included. About half the needs grant is paid out in proportion to population, so that the increase in population brings with it an increase in the proportion of needs element.
Some Members seem to think that an increase in population should lead to an increase in the amount of the needs element that goes to even out variations in costs per head in meeting needs, but this should occur only if it can be shown that an increase in population has led an increase in the cost per head. What evidence we possess is to the effect that normal increases in population such as occur in many of the Home counties do not lead to increases in costs per head.
Where there are increases in the number of special groups, such as school children and one-parent families, these are picked up in many of the needs factors. But if there are able-bodied members of the community involved in these matters, there is no reason why they should increase the cost per head relative to other authorities.
Many Members have asked about elderly people living alone and other groups in the community. We are conscious of the fact that some of the data used in this respect are out of date or unreliable, and this point was mentioned by the hon. Member for the Isle of Wight (Mr. Ross). The information was derived from the 1971 census, is now six years out of date, and we do not believe that it is sufficiently valid to be used.
On the subject of unemployment statistics, we now find that data on this topic are up to date, but can be resorted from employment exchange areas to local authority areas only on a most unsatisfactory basis. Because a large number of the unemployed do not register for employment in areas in which they live, we have had to use poor quality data in needs assessments. The Consultative Council on Local Government Finance, consisting of central and local government officials, is examining the prospect of improving data. We expect its report to be available early in 1978. We must await that report before we know what are the prospects for an improvement in the situation.
A word about my own patch, Wales. Welsh authorities have faced difficult


times in the last two years. They have responded well to the overall economic objectives set by central Government, and I wish to pay tribute to them. I very much welcome the discussions we have had with those authorities in the Welsh Consultative Council on Local Government Finance.

Mr. Wyn Roberts: rose—

Mr. Jones: I cannot give way. On the last two occasions when I gave way in similar debates my speech was so truncated that I was throwing away my speech notes like a strip-tease artist.
The comments on the settlement in Wales concentrated on the needs element of rate support grant paid to county councils. I readily admit that there will be a marginal fall in the share of needs element which Welsh counties will attract next year, in common with the fall in the share of the English shire counties. However, I wish to correct the impression that this means that the Welsh counties will get a smaller needs element this year than in others. It does not. Welsh authorities will receive an estimated £243 million in needs element next year compared with £233 million this year. Each Welsh county will receive an increase in the amount varying from county to county. Gwynedd and Powys will also benefit under the safety net arrangements.
The rate support grant also includes the domestic element. The domestic element is, in effect, a Government subsidy to all domestic ratepayers in Wales. The Government, taking into account their anti-inflationary policies, have decided that for next year the levels will remain 36p in the pound in Wales and 18·5p in England. This is of considerable benefit to ratepayers, with the higher level in Wales being worth some £21 million. Its effect is shown by the fact that, without the higher level in Wales, the average rate bill this year would be—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. We have been waiting so long to hear what the Minister has to say that it would be nice if we could hear what he said.

Mr. Jones: Thank you, Mr. Deputy Speaker. Without the benefit of the domestic element, the average rate bill

this year in Wales would be £21, or 31 per cent. higher than it is.
Similarly, all Welsh district councils will receive the third component of rate support grant next year—the resources element.
I should point out to the Welsh counties that these orders make provision for the payment of transport supplementary grant. My right hon. and learned Friend the Secretary of State for Wales will shortly be announcing the settlement for next year. I cannot anticipate what he will say, but I should point out that Wales is always treated generously. Her special needs are always taken into account in this settlement. I have no reason to suppose that this will not be the case this year.
The rate support grant settlement as a whole is therefore fair for Wales. Welsh authorities will naturally be disappointed about the reduction in their share of the needs element, but they must appreciate the value of the higher level of domestic relief to Welsh ratepayers and that of the resources element.
The hon. Member for Merioneth (Mr. Thomas) asked specifically whether the rate support grant would be decentralised to the Welsh Office before the setting up of the Assembly. Responsibility for the rate support grant in Wales is to be transferred to the Assembly, but consideration will need to be given to the precise way in which this transfer is to be made. We are now having consultations with local authority associations in Wales to try to devise a system particularly suited to the needs of Wales in this respect.
In our proposals we have tried to strike the right balance between, on the one hand, our continuing policy of concentrating resources in those areas with the most pressing social and economic problems and, on the other hand, keeping changes in the pattern of grant distribution within reasonable limits.
No one tonight has come anywhere near making an adequate case for ignoring the problems of areas faced with serious social and economic deprivation. Indeed, several hon. Members have suggested that we are not doing enough for such areas. If we had had enough resources at our disposal, we would have


liked to do more. Within a fixed overall grant total, any gains for one group of authorities must necessarily be losses for others. Some authorities must do less well than average.
I recommend the rate support grant orders to the House as embodying an

Division No. 51]
AYES
[11.29 p.m.


Archer, Rt Hon Peter
Graham, Ted
Morris, Rt Hon J. (Aberavon)


Armstrong, Ernest
Hamilton, W. W. (Central Fife)
Moyle, Roland


Atkinson, Norman
Hardy, Peter
Mulley, Rt Hon Frederick


Barnett, Guy (Greenwich)
Harrison, Rt Hon Walter
Murray, Rt Hon Ronald King


Barnett, Rt Hon Joel (Heywood)
Hattersley, Rt Hon Roy
O'Halloran, Michael


Bates, Alf
Hayman, Mrs Helene
Orbach, Maurice


Benn, Rt Hon Anthony Wedgwood
Healey, Rt Hon Denis
Owen, Rt Hon Dr David


Bidwell, Sydney
Heffer, Eric S.
Palmer, Arthur


Bishop, Rt Hon Edward
Hooley, Frank
Pendry, Tom


Blenkinsop, Arthur
Horam, John
Perry, Ernest


Boothroyd, Miss Betty
Huckfield, Les
Price, William (Rugby)


Bottomley, Rt Hon Arthur
Hughes, Rt Hon C. (Anglesey)
Radice, Giles


Brown, Robert C. (Newcastle W)
Irving, Rt Hon S. (Dartford)
Rees, Rt Hon Merlyn (Leeds S)


Butler, Mrs Joyce (Wood Green)
Jackson, Miss Margaret (Lincoln)
Roderick, Caerwyn


Callaghan, Rt Hon J. (Cardiff SE)
Jay, Rt Hon Douglas
Rodgers, George (Chorley)


Carter, Ray
Jenkins, Hugh (Putney)
Rooker, J. W.


Cartwright, John
John, Brynmor
Roper, John


Castle, Rt Hon Barbara
Johnson, James (Hull West)
Sever, John


Cocks, Rt Hon Michael (Bristol S)
Jones, Alec (Rhondda)
Shaw, Arnold (Ilford South)


Coleman, Donald
Jones, Barry (East Flint)
Shore, Rt Hon Peter


Concannon, J. D.
Judd, Frank
Silkin, Rt Hon John (Deptford)


Cook, Robin F. (Edin C)
Kaufman, Gerald
Silkin, Rt Hon S. C. (Dulwich)


Cowans, Harry
Kerr, Russell
Skinner, Dennis


Cox, Thomas (Tooting)
Lamborn, Harry
Smith, John (N Lanarkshire)


Cronin, John
Lamond, James
Snape, Peter


Crowther, Stan (Rotherham)
Latham, Arthur (Paddington)
Spearing, Nigel


Cryer, Bob
Lestor, Miss Joan (Eton &amp; Slough)
Stallard, A. W.


Cunningham, G. (Islington S)
Lever, Rt Hon Harold
Stewart, Rt Hon M. (Fulham)


Cunningham, Dr J. (Whiteh)
Litterick, Tom
Stoddart, David


Davidson, Arthur
Luard, Evan
Stott, Roger


Davies, Bryan (Enfield N)
McCartney, Hugh
Strang, Gavin


Davies, Denzil (Llanelli)
McDonald, Dr Oonagh
Summerskill, Hon Dr Shirley


Davis, Clinton (Hackney C)
McElhone, Frank
Taylor, Mrs Ann (Bolton W)


Deakins, Eric
MacFarquhar, Roderick
Tomlinson, John


Dell, Rt Hon Edmund
McGuire, Michael (Ince)
Urwin, T. W.


Dormand, J. D.
Mackenzie, Rt Hon Gregor
Wainwright, Edwin (Dearne V)


Douglas-Mann Bruce
Maclennan, Robert
Walker, Harold (Doncaster)


Eadie, Alex
Madden, Max
Walker, Terry (Kingswood)


Ellis, John (Brigg &amp; Scun)
Magee, Bryan
Ward, Michael


Ennals, Rt Hon David
Marks, Kenneth
White, Frank R. (Bury)


Ewing, Harry (Stirling)
Marshall, Dr Edmund (Goole)
Whitehead, Phillip


Faulds, Andrew
Marshall, Jim (Leicester S)
Williams, Rt Hon Alan (Swansea W)


Flannery, Martin
Maynard, Miss Joan
Williams, Alan Lee (Hornch'ch)


Foot, Rt Hon Michael
Meacher, Michael
Williams, Rt Hon Shirley (Hertford)


Forrester, John
Mellish, Rt Hon Robert
Wilson, William (Coventry SE)


Fowler, Gerald (The Wrekin)
Mikardo, Ian
Wise, Mrs Audrey


Fraser, John (Lambetn, N'w'd)
Millan, Rt Hon Bruce



Freeson, Rt Hon Reginald
Miller, Dr M. S. (E Kilbride)
TELLERS FOR THE AYES:


Garrett, W. E. (Wallsend)
Molloy, William
Mr. James Hamilton and


George, Bruce
Morris, Alfred (Wythenshawe)
Mr. Joseph Harper.


Gilbert, Dr John

equitable settlement which is as generous for local authorities as present economic circumstances allow.

Question put:—

The House divided: Ayes 147, Noes 76.

Rhodes James, R.
Stainton, Keith
Wakeham, John


Ridsdale, Julian
Stanley, John
Wells, John


Roberts, Michael (Cardiff NW)
Steen, Anthony (Wavertree)
Winterton, Nicholas


Roberts, Wyn (Conway)
Stradling Thomas, J.



Ross, Stephen (Isle of Wight)
Tapsell, Peter
TELLERS FOR THE NOES:


Sainsbury, Tim
Thomas, Dafydd (Merioneth)
Mr. Dudley Smith and


Shepherd, Colin
Thorpe, Rt Hon Jeremy (N Devon)
Mr. A. P. Costain.


Sinclair, Sir George
van Straubenzee, W. R.

Question accordingly agreed to.

Resolved,
That the Rate Support Grant Order 1977, a copy of which was laid before this House on 20th November be approved.

Resolved,
That the Rate Support Grant (Increase) Order 1977, a copy of which was laid before this House on 30th November, be approved.—[Mr. Shore.]…

Resolved,
That the Rate Support Grant (Increase) (No. 2) Order 1977, a copy of which was laid before this House on 30th November, be approved.—[Mr. Shore.]

Resolved,
That the Rate Support Grant (Scotland) Order 1977, a copy of which was laid before this House on 1st December, be approved.—[Mr. Milton.]

SOCIAL SECURITY (CONTRIBUTIONS)

11.43 p.m.

The Under-Secretary of State, Health and Social Security (Mr. Eric Deakins): I beg to move,
That the draft Social Security (Contributions, Re-rating) (No. 2) Order 1977, which was laid before this House on 1st December, be approved.
I understand that it will be for the convenience of the House and particularly of hon. Members who have a special interest in these matters if we discuss in the same debate the other motion relating to social security, which is as follows:
That an humble Address be presented to Her Majesty, praying that the Social Security (Contributions) (Consequential Amendments) Amendment (No. 2) Regulations 1977 (S.I. 1977 No. 1953), dated 28th November 1977, a copy of which was laid before this House on 1st December, be annulled.
My right hon. Friend the Secretary of State for Social Services has carried out the review of national insurance contributions he has to make each year under the Social Security Act 1975. He has had regard to the present level of the National

Insurance Fund and the likely level of future expenditure from it and, in the draft order now before the House, he has proposed revised rates and levels of contributions from 6th April 1978. Before coming to the details of these adjustments of contributions, I think the House will find it helpful to be reminded of the background to them.
April 1978 is an important landmark in the provision of cash benefits by the State. This is when the Social Security Pensions Act 1975 takes effect and employees will begin to build up for themselves, on an earnings-related basis, better provision for retirement, widowhood and chronic ill-health.
A special feature of the new scheme is that it will work in partnership with good occupational pension schemes, so that employees who are members of such schemes may be contracted out of part of the new State scheme benefits by their employers. Thus, employees will build up for themselves greatly improved benefits either entirely through the State scheme or by a combination of State and occupational pension provision. The new pensions scheme begins to provide full pensions, protected against inflation, in 20 years' time and makes it possible for millions of employees to look forward to retirement on half pay. I am glad to acknowledge that these developments in benefit provision had the general support of all parties when the Pensions Bill was before the House in 1975. Our concern now is to set revised rates and levels of contributions to finance the start of the new provisions. This gives special significance to the draft re-rating order.
The new scheme, like the present one, will operate on a pay-as-you-go basis. In other words, in broad terms the aim will be to match income with expenditure. The Pensions Act recognised that contributions for employees who were not contracted out and who would be building up rights to the newly improved benefits under the State scheme would need to be increased next year. The Act also provided for contracted-out contributions to be at a reduced rate on earnings between


the lower and upper earnings limits in recognition of the responsibility for benefit provision being taken over from the State by the occupational pension scheme. The self-employed, unlike people who work for an employer, will not be covered by the new earnings-related pension arrangements. My right hon. Friend has taken account of these various factors in setting new rates and levels of contributions which are fair to the different types of contributor.
The report which the Government Actuary has made on the effect on the Fund of the proposed new rates and levels of contributions shows that on given assumptions as to factors such as the levels of unemployment and earnings there will be a small deficit of about £25 million in 1978–79. This small decrease in the face value of the Fund does, however, represent a substantial fall in its real value as measured by the cover it provides for the payment of benefits at the increased rates which will be established at next year's review. Nevertheless, we believe that it is right to accept a fall in the face value of the Fund on this occasion in view of the good surpluses which have been created in recent years.
I turn now to the details of the changes in Class 1 contributions—that is, those affecting employees and employers—which the order would make. I shall deal first with contributions for employees who are not contracted out of the State scheme. As I have mentioned, the Pensions Act recognised that there would need to be increased contributions in their case from April 1978. There is power to set these contributions at rates which are not higher than 6·5 per cent. for employees and 10 per cent. for employers. As the Government Actuary's report shows, with rates at these levels the Fund still fails to break even and my right hon. Friend has therefore concluded that Class 1 rates for employees who are not contracted out should be raised from the present 5·75 per cent. to 6·5 per cent. and for their employers from 8·75 per cent. to 10 per cent.
In my opening remarks I referred to the set of regulations that is the subject of the Opposition's Prayer. The effect of these regulations is to raise the lower earnings limit for Class 1 contributions from £15 to £17·50 a week, which is the current level of the basic retirement

pension, and the upper earnings limit from £105 to £120 a week, which is a little less than seven times the pension rate. These changes are in line with the requirements of Section 1 of the Pensions Act.
These changes mean that an employee who earns £80 a week, which is approximately the amount of average earnings for men employed full time, and who is not contracted out will pay an extra 60p a week in contributions. The corresponding increase for his employer will be £1. For an employee earning £35 a week the increase will be 26p, with an increase of 44p for his employer. The maximum increase will be payable by employees who earn £120 or more a week. They will pay a further £1·76 a week, of which 98p a week results from the increase in the earnings limit, and their employers will pay an additional £2·81 a week. Increases in the limit result in people whose earnings are above the limit paying additional contributions from the start of a tax year, whereas lower earners face an increase immediately they receive a pay increase.
Turning now to contracted-out employees, the Pensions Act provided for these employees and their employers to pay at rates which are 2·5 per cent. and 4·5 per cent. respectively lower than for other employees on earnings between the lower and upper earnings limits. Accordingly, on the first £17·50 a week of earnings the rates will be 6·5 per cent. for employees and 10 per cent. for employers and on earnings above that level the rates will be 4 per cent. and 5·5 per cent., respectively. This means that on any level of earnings above £25 a week there will be a reduction in liability compared with 1977–78.
For example, the contracted-out employee earning £80 a week will have his weekly contribution reduced by 96p. The maximum reduction—of £1·40 a week—will be for a person earning £105 a week. These reductions are, of course, apart from any contributions or additional contributions payable to the occupational pension scheme.
There will be no change in the rate of contributions payable by those married women and widows who retain the right to reduced contribution liability. They will therefore pay 2 per cent. of earnings, subject to the new earnings


limits, whether or not they are contracted out.
I come now to the self-employed. As the House knows, it has not been possible to include the self-employed in the new earnings-related pension arrangements. They will, however, continue to qualify for a basic retirement pension and other benefits as well. Under the present arrangements the self-employed get good value for the contributions they pay, but when fixing the level of their future contributions liability it is necessary to take account of the changes being made for other contributors. It would appear very unfair indeed to the self-employed if they had to continue to pay on the present basis whereas contracted-out employees, with whom it is reasonable that they should compare themselves, will get a reduction in liability and qualify for more benefits. The new rates for the self-employed have therefore been worked out on the same basis as those for contracted-out employees. What we have done is to start by looking at the contribution payable for full members of the scheme and making a deduction from that to allow for the benefits which the self-employed cannot get.
The result is that all the self-employed will pay lower contributions; and this will help them, if they wish, to make extra pension provision for themselves. I will now give details of the proposed changes. The Class 2 rate is being reduced from £2·66 a week for men and £2·55 for women to £1·90 a week for both men and women. The Class 4 rate is to be reduced from 8 per cent. to 5 per cent. The lower limit of annual profits or gains on which Class 4 contributions are paid is being increased from £1,750 to £2·000. The upper profits limit is being increased from £5,500 to £6,250 a year to correspond with the new upper earnings limit for employees. The effect is that a self-employed man's liability for contributions will be reduced by about £39 a year at the lowest level of earnings and by a maximum of about £164 a year on earnings of £5,500 a year.
In referring to the reduction in Class 4 contributions I ought to mention that, unlike other contributions, which are normally paid weekly or monthly, Class 4 contributions are normally paid half-

yearly the first payment being in the January of the tax year to which they refer. Thus the first time that Class 4 contributions will be due for payment at the reduced rate will be January 1979.
There are two other changes under the draft order before us. First, the level of earnings below which a self-employed person can be excepted from liability is being raised from £875 to £950 a year. Secondly, the voluntary Class 3 contribution is being reduced to £1·80 in consequence of the reduction in the Class 2 contribution to £1·90. In addition, for the sake of completeness, I should mention that under the Pensions Act from next April employees and the self-employed will not be liable to pay contributions for any work done after reaching pensionable age, which is 65 for a man and 60 for a woman. An employer's liability will not be affected by this change.
Before concluding my remarks there are two points which I must make about future contributions so as to avoid possible misunderstandings. First, the reduction allowed for contracted-out contributions will not stay permanently at the present level. This reduction has been fixed to take account of the cost to occupational pension schemes of funding the benefits which the State scheme would otherwise provide. This cost must be expected to fall over the years and the contribution reduction for the contracted-out can accordingly be expected to decrease progressively, with corresponding increases in their contributions.
Secondly, what I have said about the contracted-out is also relevant to the self-employed now that their liability is being calculated on the same basis. Although Class 2 and 4 contributions will at first be much lower than at present, it is inevitable that they will rise progressively in real terms as the contributions of the contracted-out go up. It should, however, be possible to keep the new level of liability until 1983, apart from changes to the Class 2 rate and the Class 4 limits, because of rises in the general level of earnings.
I hope that the explanation I have given about the proposed changes in contributions will have enabled hon. Members to see that the annual exercise of setting new rates and levels of contributions is this year very much part and


parcel of the new improved pension scheme. The Government believe that the new contributions are fair as between different types of contributor and that they will enable the new scheme to start on a sound financial basis.
I commend the order to the House.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I understand that it will be convenient to discuss at the same time Motion No. 7
That an humble Address be presented to Her Majesty, praying that the Social Security (Contributions) (Consequential Amendments) Amendment (No. 2) Regulations 1977 (S.I., 1977, No. 1953), dated 28th November 1977, a copy of which was laid before this House on 1st December, be annulled.

11.55 p.m.

Mr. Patrick Jenkin: I am grateful to the Under-Secretary of State for his helpful explanation of the order, which, as always, is a complicated one to understand. But behind his bland and, at times, almost self-congratulatory speech lie a number of issues which should arouse the curiosity and perhaps even the suspicion of the House.
The order represents a whole series of policy lurches. I come at once to the most remarkable tergiversation of all—the restoration of the 5 per cent. rate for Class 4 contributions for the self-employed. However this may be dressed up by Ministers—and there has been a commendable but not very convincing effort by the Government Actuary in his report—this is nothing other than a belated and, I hope, abject confession that we, the Tories, throughout this issue have been right and they, the Government, have been wrong.
From the moment that the Government decided to change the 5 per cent. Class 4 contribution which was in the 1973 Act to 8 per cent., which they did in the Social Security (Amendment) Act 1975, they were met with the furious protests of the self-employed, who felt that they were simply being made to pay additional taxation.
The Government argued again and again that this increase from 5 per cent. to 8 per cent. was wholly justified by reference to the figures. I could weary the House, but I will not, with a whole series of quotations in which Ministers

sought time and again to justify the increase to an 8 per cent. contribution against the arguments deployed from this side of the House. I shall content myself with one quotation, from the late Brian O'Malley when he sought to persuade the House to reject a Lords amendment to insert a 5 per cent. instead of an 8 per cent. rate. He quoted a long string of figures seeking to justify his argument, and he went on to say:
these figures support to the hilt the Government's claim that we are simply preserving the ratio set in the 1973 Act between self-employed and Class 1 contributors".—[Official Report, 11th December 1974; Vol. 883, c.647.]
The Under-Secretary of State would now have us believe that 5 per cent. is the right figure from next April onwards, and yet—a point that he did not make—the self-employed after April are going to get exactly the same benefits as they are entitled to now. If 5 per cent. is right then, why has 8 per cent. been right for the last three years? When are the Government going to promise to repay the self-employed the additional 3 per cent. that they have filched, quite unfairly, from them over the last three years?
The Chancellor of the Duchy of Lancaster once said in the House—I fear that I have been unable to trace the quotation, but I think I have it roughly right—"If your opponents steal your clothes, you would be wiser to criticise their morality than complain about their sartorial elegance". I welcome this repentance on the part of Ministers, but I am bound to say that, in the light of their past and oft-repeated declarations, this repentance owes more to their search for votes in an election year than to any fine actuarial calculation.

Mr. Stephen Ross: I suppose that right hon. Gentleman could not possibly accept that the Lib-Lab pact had something to do with it, or that my noble Friend Lord Banks had something to do with it, but I think that at least Lord Banks deserves some credit.

Mr. Jenkin: I am not sure how much credit to give to Lord Banks. I read his speech in another place. The only thing that has changed is that the Government have lost a lot of seats to the Tories and realise that they have to make some concessions to the case that we have been making.

Mr. Joseph Harper (Comptroller of Her Majesty's Household): indicated dissent.

Mr. Jenkin: Perhaps the hon. Gentleman has forgotten Workington, Stechford, Walsall, North and the rest. The Government are really having to scratch around for votes, whether by ski-ing down Everest in the nude or not I do not know.
The language used by Lord Wells-Pestell in another place is scarcely the language of actuarial calculations. He said:
my right hon. Friend the Secretary of State"—
I am glad to see him here—
—"has tried to be as fair as is humanly possible in a matter of this kind"—[Official Report, House of Lords, 12th December 1977; Vol. 387, c. 1889.]
Yet his hon. Friend has sought tonight to justify the change by referring to a series of complicated actuarial computations. That was not the language of an actuary. That was the language of a politician, and it fully justifies my claim that this owes more to a search for votes than to any actuarial calculations.
The Government Actuary himself—a very learned gentleman—has clearly been hard put to it to reconcile his professional integrity with the Government's electoral considerations. When he comes to what the contribution of the self-employed should be, in paragraph 33 of the report, he states:
Unfortunately the necessary data are not available for a precise assessment of these contribution rates.
I do not blame the Government Actuary. He has been faced with a totally impossible situation and has made the best of a bad job.
Before the self-employed throw their hats in the air, I advise them to make a close study of paragraph 34 and table 4 of the Government Actuary's report, which shows that the rates for self-employed will double in real terms over the next 30 years. If these calculations have any relevance, therefore, their newfound reduction is likely to be very short-lived. With great deference to Sir Edward Johnston, the Government Actuary, I find the whole exercise remarkably unconvincing.
I believe that the self-employed are entitled to an open investigation of the

relative benefits they enjoy and the contributions they pay, and the next Conservative Government will certainly implement the public pledge I gave earlier this year to a conference of self-employed and small business men.
The next volte face which the order embodies relates to employees who are contracted into the State scheme. Hon. Members will know the history of this. The 1975 Act envisaged a combined contribution of 161 per cent., made up of 61 per cent. from the employee and 10 per cent. from the employer. However, the right hon. Member for Blackburn (Mrs Castle) made it clear on 18th March 1975 that
These initial rates are not yet firm. They should be regarded for the moment as illustrative only"—[Official Report, 18th March 1975: Vol. 888, c. 1499]
But when Ministers came to the House with their order in 1976 they came with an increase in contributions for the current year which produced a huge surplus for the National Insurance Fund. As we explained at the time, that was done for Exchequer considerations—to fund the borrowing requirement. But the Government obviously felt that the figure of 161 per cent. was likely to be too high next April, and they tabled an amendment to the Social Security (Miscellaneous Provisions) Bill to enable a lower figure to be specified.
On 16th December last year, the Under-Secretary told Standing Committee A:
The present state of the National Insurance Fund makes it likely that the next autumn's contribution review will lead us to want to establish lower rates than those from the start of the new stheme".—[Official Report, Standing Committee A, 16th December 1976; c. 64–65.]
The hon. Gentleman said "likely". That was a year ago, when he said that it was "likely" that we would have lower rates. Yet here we are, a year later, right at the top of the limit that the Government could impose by order-161 per cent.
So far from there being a surplus in the Fund, the Government Actuary's report envisages a small deficit on the year. Why is that? What has happened? We know that unemployment is much higher than the Government envisaged and that inflation was much more rapid this last year than they had envisaged. Is that the reason why the Government have


changed their mind and that, so far from its being "unlikely" to be lower, it is right at the top?
We must also take note of the assumptions in the Government Actuary's report. These are assumptions that he has to take from the Government. It says that next year unemployment will rise by only 120,000, that earnings are to rise by only 10 per cent. and that prices are to be taken as increasing by only 6½ per cent. As Pat Healey noted in The Times, those assumptions are "open to question".
I must ask the Minister to spell out what could be the effect on the surplus in the National Insurance Fund if inflation runs at a figure higher than 6½ per cent. and if unemployment goes higher than a additional 120,000. Paragraph 11 of the Government Actuary's report gives some information but not enough to enable one to make that calculation.
I remind the House that the Government got it all wrong last year. When the DHSS was examined by the Select Committee on Expenditure, it was pretty severely mauled by that Committe. Let me quote one or two sentences from its report. It said in para 5.7:
The Government's calculations about the proportion of unemployed entitled to such benefits proved to be wrong.
The Committee said at paragraph 5.8:
The DHSS witness informed us that 'we really do not know why the number eligible for unemployment benefit has turned out to be less than had been estimated.'
Last year, in its calculations, the Department provided an "estimating margin" of £300 million, but of that the Select Committee said:
But the Department was unable to explain why the particular figure of £300 million was chosen, and conceded that 'it is not calculated according to any formula' and that, indeed, the Department would find it difficult to challenge the appropriateness of making the figure £200 million or £400 million.
This year the figure has been omitted altogether. Perhaps that is the wisest course in view of what was said about it last year.
There is one more rather surprising point about the Government Actuary's report, and that is in para 17 and in table 3, where it looks forward over the next

30 years and compares the current forecast with the previous one. It says:
account has been taken of the latest population projections, the main changes from the earlier projections being the assumption of lower births
That is one report put out by the DHSS.
Only a few weeks later there was another report by the DHSS entitled "The Way Forward" and relating to health and personal social services. In para 1.7 of that report one sees a reference to population projections. It says:
Population projections are vital to effective planning. In recent years, projections of the number of births have indicated a continuing decline followed by a swift rise. The 1976 based projections of births again show a decline followed by a swift rise but, as with all recent projections, the timing of the upward turn in the birth rate has been delayed by a further year.
If one examines the chart on page 3 of the report, one sees a swift rise indeed in the birth rate. I am bound to ask the Minister which of those reports is right. Is it the one that assumes, as does the Government Actuary, a continual decline in the number of births, or is it the other report to do with the Health Service which assumes a swift rise in the number of births? What is clear is that they cannot both be right. This is a case of the right hand and the left hand—or, perhaps, the two left hands—of the Minister not knowing what the other is doing. It might be possible to reconcile them somehow, but for the life of me I cannot see how.
Then there is the vital question of the numbers contracted out of the new pension scheme next April. The Government Actuary assumes 9 million. Is that intended to be a realistic estimate, or is it an estimate that allows a margin of error? We always warned that the Government would not be able to get the full numbers fixed and settled by 6th April next year because of the appalling chaos that has surrounded the whole question of contracting out, due to the chopping and changing of Government incomes policies.
I welcome the number of relaxations of statutory requirements which the Government have announced in succession over recent months, but it will be a "damned close-run thing", if I may use a quotation. A large number of companies will find themselves right up against all the deadlines.
If the figure differs by 1 million from 9 million the effect is to alter the income of the fund by £190 million. Does the 9 million include a margin, or is it the best estimate that can be made?
Perhaps I can end on this note. My party remains convinced that the 1975 Act provides a workable, if not ideal, basis for a proper partnership between the private sector and State pension schemes.
A careful balance was struck in the 1975 Act. That has been reinforced by quite a number of new safeguards since then, but the way in which the introduction of the scheme has been handled and messed about by various incomes policies and other measures has sorely tried our continuing support.
If the Government were ever so unwise as to proceed with their highly provocative and unpopular proposal for 50 per cent. trade union control of pension funds, the bipartisan policy would end. That would be a great pity, because a bipartisan policy remains essential.
We know that there will be further developments in pensions. We shall have to deal with flexible retirement, harmonisation of pension ages for men and women, the changes embodied in EEC social policy and the concept of phased retirement. These and many other changes are on the cards. We want, therefore, to maintain a bipartisan policy.
The order does no more than launch the new scheme. Both parties owe it to the country to eschew the partisan, the provocative and the doctrinaire, so that in future years the scheme can develop on sound and consistent lines.
I hope that the Government, in their further consideration of the divisive proposals that they have in cold storage, will bear that in mind. Nothing could give greater confidence to the whole pensions movement than for them to say that they will make no major change in the pension scheme which does not have the support of all major parties in the House.

12.13 a.m.

Mr. Robin Hodgson: My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) referred to the improvement in the treatment of the self-employed but suggested that those benefiting from the change

should look behind the immediate motives given this evening and consider the more underlying factors which have governed the Labour Party in its treatment of the self-employed.
My right hon. Friend referred to the change in the political climate of the country, and particularly to the by-election losses that the Government have suffered. As one who had a particular interest in at least one of those changes, I should like to add a few remarks on that point.
Whereas the self-employed in my constituency, of whom there are many, will welcome this change, there is no doubt that they will also feel that there is much more to be done of a fundamental nature in their treatment by the Government before the damage done to them over the last four or five years will be repaired.
There is a tradition in the Black Country, in the West Midlands, of sturdy self-reliance, of people leaving the employ of large firms and undertaking jobs on their own: skilled toolworkers, locksmiths and craftsmen of every sort. Those people have been hard hit by the Government and were to a large extent responsible for their defeat in the by-election at Walsall, North.
Turning, however, from the question of the self-employed to the question of the unemployed, we have already heard of some of the weaknesses and lack of clarity in the Government's approach. After the bland assurances that we have heard in the House from the Prime Minister and his Front Bench colleagues, it is, perhaps rather surprising—shattering even—to read that the Government have instructed the Government Actuary to consider that unemployment will be higher next year than this year and that the unemployed total of 1–65 million will include 180,000 school leavers.
Reports from study groups suggest that unemployment will go a great deal higher than that and will in fact reach 2 million. The report of the Government Actuary suggests in paragraph 11(ii) that each increase of 100,000 in unemployment will reduce or worsen the position of the National Insurance Fund by some £135 million.
If, therefore, the worst forecasts were to come true and we were to reach a level of 2 million unemployed, the National


Insurance Fund will over a full year obviously face a reduction of some £700 million—a very substantial sum. The Minister owes it to us tonight to say something about the contingencies he has prepared for or built in for margins of error in forecasting the level of unemployment, particularly since with every month that passes the level of production continues to fall. It seems to me that to work on this basis and to allow for a deficit of £55 million is not good enough.
The second point as regards estimates concerns the question of contracting out. The report covers this in paragraph 20. I know from my colleagues and friends in insurance companies in the City that so far there has been a very low level of applications to contract out, and, unless there is to be a rush at the end, it may well be that the figure of 9 million which is given in the report will not be reached. Perhaps the Minister will tell us what the latest position is and say in particular if the period for approval is extended for a further few months after July, what the effect of that will be on the Fund as a whole.
Both these two points—the question of the level of unemployment and the question of the number of people contracted out—involve very considerable sums of money—£135 million per 100,000 difference in unemployment and £190 million per million contracted out or non-contracted out. We are talking not about small sums but about very substantial sums. The Minister owes it to us to make the position clear.
The cost of administration is rising from £380 million to £420 million, an increase of about 10 per cent. This is in line with the increase in the amount of benefit paid out or of outgoings from the fund. Is it really necessary for the cost of administration to increase pari passu? Can we not do something to increase the efficiency with which the fund is administered, so that we are able to reduce the percentage of administration and thereby ensure that the maximum percentage of contributions so hardly won from the working population reaches those in need rather than being skimmed off along the way to pay for the administration of the scheme?
I seek clarification, too, on the question of the £10 Christmas bonus. A few

weeks ago we had a debate late one evening on the question whether the bonus should become statutory in future. I believed then and still believe that it should not be left to Governments of whichever party or of whatever political colour to decide whether to hand the old-age pensioners a Christmas bonus. Has the payment of this sum been allowed for in the actuarial calculations in the Government Actuary's report? Has it been allowed for payment next Christmas?
My final point concerns incentive. There is a need to get employers to employ more people and to give them productive work, and for employees to be able to want to work harder because they keep more in their pockets after all deductions. One aspect will increase employment opportunity and the other will encourage people to work hard.
The Minister's right hon. Friend the Chancellor of the Exchequer has made great play of his tax reductions. Tonight we see that a proportion of the reductions which have been passed to the working man will be removed with the increase in the national insurance contribution. The reductions were introduced with blazons of publicity, but they are being taken back by stealth at midnight. It is a pity that the need for incentive and rewards for hard work is not more appreciated by the Government.

12.21 a.m.

Mr. Tony Newton: It seems that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and my hon. Friend the Member for Walsall, North (Mr. Hodgson) have covered almost all the matters that I wished to raise. I do not want to do very much more than ask the Under-Secretary of State one question.
The hon. Gentleman has concentrated a great deal on the self-employed, and my right hon. Friend has rightly said that there has been a thinly disguised retreat from an untenable position. However, in view of the concentration that the hon. Gentleman has given to the self-employed, I should like to ask him about one specific point. It concerns an issue that the self-employed have always seen as one of the injustices of their position—namely, their coverage for health purposes if they go to Europe.
I am aware that the Chair can say that this is wholly irrelevant, but in the minds of the self-employed it has not been irrelevant. Anybody who talks to them about their social insurance will find that this point comes up time and time again. They say to me "We pay the full contributions, but if you go to Europe you can get free health cover for your children but we cannot because we are self-employed." That has been seen as one of the injustices of their position.
For two to three years Ministers have been saying" This is very difficult. We shall try to sort this out with Europe. We hope that something will happen soon." If the Chair permits, I hope that the Minister will be able to give us a brief report on the current situation.

12.23 a.m.

Mr. Peter Brooke: My remarks will be brief at this hour. However, they will inevitably go back over the ground so admirably covered by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin).
It has always seemed to me that in dealing with the nation outside there is an obligation on the House to maintain the credibility of politicians in the eyes of the public as a whole. I listened to the Under-Secretary with great care when he gave his account, and I have read the Government Actuary's report, which sets out a complicated subject with admirable clarity. I follow clearly, both in the Government Actuary's report and in the hon. Gentleman's remarks, how they have arrived at 5 per cent. for the future. However, I am bound to say that I did not hear—perhaps it was a mishearing on my part—any description of the way in which 8 per cent. has been justified in years past. If I did miss it, I shall be grateful if the hon. Gentleman will repeat that stretch of his speech when he replies.

Mr. Deakins: I did not catch the hon. Gentleman's last point.

Mr. Brooke: I was saying that from the Government Actuary's report and the hon. Gentleman's remarks at the beginning of the debate I had no difficulty in understanding that the figure is to be 5 per cent. in future. I may have misheard the hon. Gentleman, but I did not follow his explanation why it has been 8 per

cent. in the years past. It seemed that the Government Actuary's explanation would well have covered 5 per cent. in past years as well and that nothing new has happened in the current year suddenly to change the circumstances.
I would forgive the self-employed and the public at large for regarding politicians with some cynicism when we move the figures around in the way that they have been moved on this occasion.
I have a second misgiving. I am delighted that the calculations show that the figure should be 5 per cent., but there is a further obligation—it may come within the framework of bipartisan policy to which my right hon. Friend the Member for Wanstead and Woodford referred that we should not have substantial changes in these rates from year to year. If we are to nurse the economy back to health—I congratulate the Government on some of the things that they have done in the last 12 months—the Government will have to depend very much on the confidence of business men that they will be able to operate in stable conditions, in which they can rely on the underlying variables being reasonably constant from year to year.
I do not think that a switch such as that from 8 per cent. to 5 per cent., which is significant in the context of individual business men, is being fair to the business community in dealing with the economy. The problems lie in planning ahead.

12.27 a.m.

Mr. Deakins: I am grateful for the fact that at this late hour we have had a reasonably short and sharp debate, and hon. Members have not wasted their words, although some points have been repeated by successive speakers.
I shall deal first with the change from 8 per cent. to 5 per cent. There is a logical explanation for the change, although I realise that the Opposition may not accept it for political reasons.
Previously, under the national insurance scheme the self-employed were compared with the employed. By and large the self-employed received lower benefits and therefore, in total, paid a lower contribution. It was 8 per cent. compared with 14 per cent., regardless of whether the person concerned was in an occupational pension scheme. We believe


that this represented good value for money for the benefits that were received.
With the start of the new scheme there is a new basis of a mixture of pay-as-you-go for part of the 23 million working population and a funded basis for those who are contracted out in occupational pension schemes. The basis of comparison could not remain the same. The comparison now becomes one between the self-employed and those employed persons who are contracted out. It would be ludicrous to compare the self-employed with the contracted-in, since, in our view, the position of the self-employed is analagous to that of the contracted-out.
In these circumstances we think that a 5 per cent. figure represents a reasonably fair assessment of the benefits that these people are getting compared with the contribution to the cost of benefit paid by those contracted out.
Perhaps the Opposition feel that in changing the basis of contribution we have changed the basis of the argument, but one cannot have a new pension scheme on a different basis from the previous scheme without considering the factors in this way.

Mr. Patrick Jenkin: Will the Minister confirm that what I have said is right—that the self-employed are getting the same benefits after April as they have had for the last three years? If 5 per cent. is to be right after April, how can 8 per cent. have been right for the last three years?

Mr. Deakins: One has to look at the scheme over a period. The point the right hon. Gentleman has made would be valid only if the contracted-out in the first year were to be paying 2·5 per cent. less than under the previous scheme while getting the same benefits. But the comparison is not valid either for the contracted-out or for the self-employed, because of the different basis on which the new scheme is operated. It is no longer a pay-as-you-go basis for everybody, but is partly that and partly a funded basis. The two are brought together in the context of the partnership between the State scheme and occupational pension schemes, which leads to a different assessment of both the self-employed and the contracted-out.
The second point mentioned by the right hon. Gentleman is important. I

read the debates on this matter in Committee in December last and January of this year. We spent half the time in Committee seeking to remove a provision from the previous legislation, and that forced us to take a figure of 16½ per cent. so we had the option of anything lower than that figure. I remembered that at the time the hon. Member for Wallasey (Mrs. Chalker) and the hon. Member for Acton (Sir G. Young) said that the Government were being optimistic. But the Opposition were being pessimistic and thought that the figure should be 16½ per cent. or an even higher figure. The difference lies in the change in estimating assumptions in the past year.
Let me mention one of the difficulties that the Government Actuary faces over some of the figures on the new earnings-related pensions begun in 1975. One of the key factors concerned the difficulty of estimating the earnings-related figures during the initial stage of those contributions. That difficulty has been more or less overcome. We now face a new difficulty in terms of the numbers of contracted-out people and their earnings distribution. The matter will take time to settle down and for the Government Actuary to obtain the figures.
I wish now to deal with the points put forward on population projections. There is probably a genuine misunderstanding about the birth projection figures quoted in the two documents. Paragraph 7 of the Government Actuary's report refers to the change from the earlier projections set out in paragraph 34 of Command 5928. That document was published three or four years ago. There need be no inconsistency between the limited comment in the present report about lower births and what is set out in the document entitled "The Way Forward". All the Government Actuary is trying to say is that the 1976-based projection assumes a lower number of births than did the 1973-based projections used in Command 5928. The fact that births may decline and then rise is relevant to both projections. The trend is the same; it merely relates to an absolute level.
The right hon. Gentleman made an important point about the number of those who have contracted out. I think he was wondering why the Government had instructed the Government Actuary to assume that the figure would be 9


million when about a year ago the figure was 8 million. I refer the House to an article in the Department of Employment Gazette in May this year which set out the numbers of employees in occupational pension schemes over a period of 40 years. The relevant figures show that in 1971 there was a total of 11·1 million people in occupational pension schemes; in 1975 the figure rose to 11·5 million. There may be a marginal increase for the 1976 period. On that basis the Government Actuary and the Government have had to be guided in choosing a proper figure, but it is still an estimate because we still do not know how many will contract out. I am glad that the hon. Gentleman acknowledged the efforts of my right hon. Friend the Minister for Social Security in recent parliamentary statements and answers.
In terms of the various concessions, time limits, and so on, the figure of 9 million is based on the present estimate, but next year the Government Actuary may say that the figure was wrong and should be 81 million, 9 million or even 10 million. One does not know. We have to make the best estimate we can.
Government policy has already been stated on the subject of member participation, and there is nothing more I can add. The right hon. Member for Wan-stead and Woodford (Mr. Jenkin) will know that we are unable to take any immediate legislative action.
The hon. Member for Walsall, North (Mr. Hodgson) spoke of a possible rise in unemployment figures. Heaven forbid that that will be the case, but he suggested that if that were to happen it would be a drain on the fund. The Government Actuary, in paragraph 11, has set out the consequences. But we have a balance in the fund which, at the end of next year, will be about £3,800 million, and that will cushion the blow if that estimate is wrong.
The hon. Gentleman referred to administrative efficiency. I queried the point about administrative costs when going through the Government Actuary's report. The £380 million shown for the current year and £420 million for next year are estimates of the administrative costs of collecting and recording contributions and of paying out fund benefits. They represent abount 4 per cent. of the

fund's turnover—that is, the benefit expenditure or contribution income, but not both.
The cost of administering an elaborate system of social insurance does not seem excessive at 4 per cent. The increase next year over the current year's costs is largely accounted for by the higher wage bill to be expected. The Government Actuary was instructed to assume that salaries would not grow by more than 10 per cent.
The hon. Gentleman also asked about the Christmas bonus. Nothing has been allowed for in the Government Actuary's calculations, which have to reflect the statutory provisions for benefits. I remind the hon. Gentleman that the bonus has been paid out of the Consolidated Fund, not out of the National Insurance Fund.
The hon. Member for Braintree (Mr. Newton) talked about the position of the self-employed and the EEC. I accept what he said about the concern of the self-employed, but I do not want him to leave the House with the misleading impression that the Government have been dragging their feet on this matter. There is a long explanation which I have given to a large number of hon. Members in the form of letters when their constituents have raised matters with them. The general position will be known to hon. Members. Article 51 of the Treaty of Rome refers only to employed persons and their dependants, not to self-employed persons. Therefore, in effect, we have to take the rest of the EEC along with us in a way which some member countries obviously find great difficulty in doing. Indeed, it is hard to expect them to extend to our self-employed, when on holiday or business in those countries, concessions which they do not give to their own self-employed. There is a working party in Brussels looking into this matter. We hope that it will gradually thrash out the problem in a way that will achieve harmony and acceptance within the Community.
I hope that I have answered all the points that have been made in the debate. I commend the order to the House. We are, I hope, making a bipartisan approach to pensions. I am sure that, having launched the new pension scheme, as the years go by we might not have such long debates on the various assumptions


that have to be made when these orders are presented to the House.

Question put and agreed to.

Resolved,
That the draft Social Security (Contributions, Re-rating) (No. 2) Order 1977, which was laid before this House on 1st December, be approved.

CHURCH OF ENGLAND (DIOCESES MEASURE)

12.38 a.m.

Mr. Terry Walker (Second Church Estates Commissioner): I beg to move,
That the Dioceses Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.
The Church of England today has 43 dioceses. In 1830 there were only 26, but the number was gradually increased over the 100 years from 1830 to 1930.
The dioceses vary considerably in size. In most cases, the diocesan bishop now has the help of one or two suffragan bishops, but in the smallest dioceses—for example, Portsmouth—there is no suffragan bishop. In the largest dioceses there are three suffragans or, in one case, four.
In recent years there has been a good deal of debate about the role of the bishop. The debate has involved both theological and practical issues. We all expect a bishop to be a public figure in the wider community as much as in the Church. In his diocese, he is the father in God to his clergy and people. In his person and office, he expresses at one and the same time the continuity of the church in that diocese and its visible link with the wider Church. A bishop today is very different from his predecessor of 100 or even 50 years ago. In these days he is not a distant prelator figure. Instead, he expects and is expected to be much closer to the people of his diocese and to be much more readily available to them than his predecessors ever were. He still has his role of the leader of the church in his diocese and, more widely, a role of leadership in the secular community, but he is also an encourager and enabler—someone to whom clergy and people constantly turn for advice, for guidance or for encouragement.
In this setting, many people have come to feel that the position of a suffragan bishop is most unsatisfactory. In practice, the suffragan has something less than the fullness of episcopal authority and responsibility which is at the heart of the work that a bishop does. The reason lies in the fact that a suffragan is very limited in his authority. He receives a commission from the diocesan bishop which sets out the responsibilities that he is to exercise, but there are some which, as the law now stands, the diocesan bishop cannot delegate, even if he wants to. Moreover, the arrangements that one diocesan bishop makes can be swept away at a stroke by his successor in office.
All this has led many people to argue that there should be only one bishop in each diocese—in other words, that the suffragans should be upgraded to full diocesan status, even if it means that we have to have, say, 120 diocesan bishops instead of the present 43. However, there has been little support for a suggestion of this kind. The prevailing view both in the General Synod and in the Church at large is that the better course by far is to develop and expand the effective devolution of authority from the diocesan bishop to his suffragans. The aim is that the suffragans should have full authority for a given geographical area and that it should be possible to give permanence to such an arrangement extending beyond the term of office of the existing diocesan bishop if such arrangement represent the considered judgment of the diocesan and suffragan bishops, their clergy and their lay people.
In recent years, side by side with this debate about the nature of a bishop's authority and of his pastoral oversight, there have been discussions in the Church about boundaries. It has been suggested that the Church ought to redraw the boundaries of its dioceses to match the reorganisation of local government. But opinion within the Church has been largely against this—and is likely to remain so, at least until we are sure that the present local authority boundaries are to last.
There are many other reasons for not changing diocesan boundaries. There are strong feelings of loyalty to existing dioceses. It has been helpful both to the Church and to local authorities for the


Church's administration to remain constant while secular local government has in many cases been in turmoil. For example, in some parts of the country, continuity in the local administration of education has effectively been provided by the churches.
It has been easy for the existing dioceses to find ways of relating to the new local authorities, despite boundary differences, and the bishops prefer to get on with the real work of the Church instead of being distracted by the complexities of continuing reorganisation. But while there is no enthusiasm for any wholesale redrawing of diocesan boundaries, the feeling is that it should be possible to make changes where, after due consideration, people in the dioceses concerned conclude that such changes are warranted.
Therefore, the Measure has three main ingredients. First, there is provision for the redrawing of diocesan boundaries, including, if it should be necessary, the dissolving of existing dioceses and the creation of new ones. Secondly, there is provision for a diocesan bishop to be able to delegate to his suffragans full responsibility for a particular area of the diocese or for a particular piece of work, subject to the right of his successor as diocesan bishop to revoke or vary those arrangements. Thirdly, there is provision that the diocesan bishop may, with the consent of the diocesan synod and the concurrence of General Synod, delegate responsibility for an area on a permanent basis—that is, so that the arrangements will bind successive diocesan bishops unless all concerned, the diocesan, the suffragans, the diocesan synod and the General Synod, are ready to approve different arrangements.
A common factor in all three ingredients is that the initiative in any matter will lie with the diocese or dioceses concerned. In all three cases there is a requirement that the diocesan bishop must have the support of his diocesan synod for any change. If there are to be reorganisation schemes, including boundary alterations or the dissolution or creation of dioceses, there is ample provision for interested parties to make representations—provisions which are strengthened by the General Synod at the suggestion of the Ecclesiastical Committee. But while

the initiative at all stages is to be local, the General Synod's approval will be required in the first and third of the three situations that I have described—reorganisation, and cases where there is a permanent delegation of authority.
The Measure accordingly provides for the General Synod to set up a Dioceses Commission—in effect, a committee of about a dozen people. In any case in which the General Synod is involved the diocese concerned will have to consult the Commission, which will be available to advise the General Synod on the desirability and feasibility of particular proposals and to advise dioceses in framing the proposals. It is not expected that there will be a great rush of work, although it is known that two dioceses have proposals which they will want to bring to the Commission and the General Synod if the Measure is approved by the House. Over the years the Dioceses Commission will build up an accumulation of experience, enabling it to advise the dioceses on how best to frame proposals and ensuring that local developments are broadly consistent with the pattern being formed in the country at large.
When this Measure came up for consideration in another place, some people asked whether it had any constitutional implications. As I see it, there are no constitutional implications. The Measure will not affect the number of bishops26—who sit in another place, nor will it affect the rule of seniority that governs the order in which they take their seats, or the way in which bishops are appointed by the Crown.
If, in future, the boundary of a diocese is altered, or a diocese is abolished or created, it will not be a matter for Parliament. Surely this is in line with the desire of most of us that detailed Church business should no longer come to the House. Equally, it is right that there should be some limits to the powers devolved upon the Church, and this will not give the General Synod the right to create new provinces or to create three or four archbishops. In such cases the Church would have to come to Parliament, and that is not unreasonable for an established Church, given the wider public interest involved.
This Measure is an enabling one for the Diocese of the Church of England


to use if it wishes to do so. It is a piece of machinery that can be used in respect of particular dioceses if that is desired. It places responsibility for local changes precisely where that responsibility should lie with the people on the ground, subject of course, to proper safeguards.
The object of the Measure is simply to enable a bishop—diocesan or suffragan—to do his job more effectively and I hope that the House will approve it.

Resolved,
That the Dioceses Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for Her Royal Assent in the form in which the said Measure was laid before Parliament.

HOUSE OF COMMONS (LIBRARY)

Motion made,
That this House doth agree with the Select Committee on House of Commons (Services), in their Fifth Report, in the last Session of Parliament, on Computer-based Indexing for the Library.—[Mr. Bates.]

Hon. Members: Object.

MR. DUDLEY GLANFIELD

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

12.53 a.m.

Mr. Michael Grylls: I want to raise the case of a constituent of mine, Mr. Dudley Glanfield. It has been going on for about 22 years, which must be a record. A large number of Ministers, Members of Parliament and civil servants have been involved in it. It has been so complicated that about 5 cwt. of documents have been involved. Thus, from the very beginning it has been a cause célèbre.
Mr. Glanfield has felt, over the years, so badly treated as a result of the various things that have happened that he labels his writing paper "Grand Central Junction" because "every ruddy thing passes through here." This is an indication of his feelings.
The case started in 1955 when the then electricity board sought to get a voluntary wayleave to put a super grid line of

pylons across Mr. Glanfield's land. Mr. Glanfield had a good farm on a lot of land that had been reclaimed with his own money, and he was not prepared to give that voluntary wayleave.
The then wayleave officer said that it did not really matter whether Mr. Glanfield gave it or not, because compulsory wayleave could be obtained "as automatically as getting a ticket out of a slot machine". That was the first brush that Mr. Glanfield had with the arrogance of the bureaucracy. However, Mr. Glanfield was responsible and tried to find an alternative route. His surveyor looked at the land and proposed an alternative over some scrub land which it was felt would be perfectly possible as a route and not so damaging to farm land.
My predecessor, Sir Lionel Heald, was asked to try to help in mediating between Mr. Glanfield and the electricity authority. As a result, there was an inquiry held on 15th December 1955 by an inspector from the then Ministry of Fuel and Power, Mr. Grimmitt, and the alternative route was put forward by the professional adviser and considered. As a result of that inquiry the inspector found that that was a proper route and less damaging to farm land and perfectly adequate for the electricity authority. Indeed, I believe that Mr. Grimmitt walked over the route and hands were shaken on it and it was made perfectly clear that he was happy.
Mr. Glanfield then thought that that was the end of the matter and that the alternative route would be agreed. He was therefore extremely surprised when, a month later, he received a compulsory wayleave for the original route. On making inquiries he discovered that the general direction of the route originally proposed had been authorised by the Minister six months previously. He was not unjustified in thinking that the whole inquiry had been a farce, although, of course, I realise that the inquiry was basically a planning inquiry for the siting of the pylons.
However, having gone through the procedure of an inquiry into the alternative route only to discover that the Minister had approved the original route in principle six months previously was somewhat extraordinary. Mr. Glanfield described that at the time, with a good deal of justification, as a farce. I quote again


from a letter that Mr. Glanfield wrote at that time:
The fact that the compulsory wayleave was made on the original route, quite contrary to the weight of the evidence at the hearing, quite conclusively proves that such hearings are a theatrical farce, putting the householder to heavy legal expense, with the papers to be put in the wastepaper basket with little or no consideration.
Mr. Glanfield once again asked his Member of Parliament to intervene and as a result of a meeting at the Department it was agreed that if the Ministry of Agriculture could look into it and put forward a report that said that if the alternative route over the scrub land was better from the agricultural point of view, the Ministry would be prepared to agree. A Ministry representative looked at the route and found, indeed, that it was much better from the agricultural point of view and much less damaging to the farm. So Mr. Glanfield thought again that everything had been put right and that the alternative route would be agreed.
Mr. Glanfield then discovered that the construction of the pylon bases had already started and the Ministry then said that it would cost £2,500 to alter the route. Even when Mr. Glanfield offered to pay that money the Ministry said that it would still be too expensive and would cost even more. It seemed that every way that Mr. Glanfield turned he was faced by what he described, with justification, as tyrannical bureaucracy of the worst degree. In desperation, having explored all legal channels and having used his Member of Parliament, who had been extremely helpful, he did something that none of us would ever suggest to our constituents. Mr. Glanfield turned his farm into an armed camp, and it seems odd, now that we are sitting quietly in the House, to think that this is what happened. Guns were brought in and mines were laid in the fields. Barbed wire was put up and wild dogs were brought in. They even brought in a number of wild bulls to keep contractors out of the area. I am glad to say that contractors were wise enough to stay away.
An impasse had been reached. The sort of headline appearing at the time was "Electricity Authority and Hitlerism". Mr. Glanfield felt that the only way to

defend his property was to put barbed wire around it to keep people out.
Obviously, there had to be agreement. The electricity board was claiming damages for delays in getting the route through and Mr. Glanfield was making counter claims. Sir Lionel Heald intervened again and another meeting was held. It was agreed that all financial claims would be withdrawn, that all work on the pylons would stop, and that the Minister would consider the matter again and decide finally what was to be done.
Sadly for Mr. Glanfield, the Minister decided on the original route, despite all that happened—the inquiry, the advice of the Ministry and the fact that 16,000 people had signed Mr. Glantield's petition. It seemed to him that every way he turned he was steamrollered and that the Minister was determined to go ahead with the line of the original route. The original pylons were put up and the only thing left for Mr. Glanfield to do was to try to get compensation. He was offered the derisory sum of 17s. 6d. per pylon per year. In Sussex, only a few miles from Surrey, land owners were being offered at that time £10 per pylon per year and Mr. Glanfield could not understand why he was offered so little. A legal wrangle then started over compensation and there was also a wrangle over tree cutting. Since 1955–56, the electricity board has paid for pruning of trees in some years, but not in others.
There seems to be a complete impasse on how the compensation should be sorted out and who should pay for all these things. We have the sad spectacle of a 74-year-old gentleman who has been bullied and bothered for 23 years by bureaucrats and everyone else. He wonders what he can do and is at the end of his tether in trying to get a legal settlement out of the board.
I hope that the Minister, who has been listening patiently and, I am sure, has studied the many papers in the case, will be able to open a window so that there is a possibility of giving Mr. Glanfield reasonable compensation so that the files can be closed on the case and he can live the rest of his life in peace.
I hope the Minister will note what the board said in a letter on 30th September 1977. It accepted that the line may have caused a loss in the value of Mr. Glanfield's property and suggested joint action.
It was proposed that his agents should make a claim for such loss and that if a settlement could not be reached by negotiation the matter could be referred to the Lands Tribunal for determination. The board would require a permanent easement covering the line in exchange for any agreed payment.
Very large figures have been involved in this case. Damage has been done by the erection of the pylons, and there is the damage that pylons do because they are on farming land. The sum of up to £200,00 has been quoted. I am in no position to make a judgment on that figure, and it would be wrong of me to do so, but clearly the board is prepared to enter into negotiations, and I hope that that Minister will use his authority—I am sure that he would want to give a fair wind to the negotiations—and will say to the board "get down to negotiations with Mr. Glanfield and arrange a reasonable sum so that justice can be seen to be done".
This man—he is a good, solid Englishman—really believes that justice has not been done and that he has been let down over these years. In a country like ours, known for its fairness, the way that this man has been treated for so long is a shame. Individual freedom is very important. It is my privilege to be able to speak in an Adjournment debate and raise the individual cases of constituents, and I do not believe that there is a stronger case that I could raise on behalf of one of my constituents. Mr. Glanfield's individual freedom has, I believe, been sadly attacked over these years and 25 years of his life have really been almost destroyed in trying to fight his case for his own property and his own farm.
The Minister is, I know, a man of humanity and understanding. I make a final appeal to him to do his best to ensure that justice is done to Mr. Glanfield and that negotiations are begun to draw to a close this very sad case history.

1.7 a.m.

The Under-Secretary of State for Energy (Mr. Alex Eadie): I am grateful to the hon. Member for Surrey, North-West (Mr. Grylls) for raising this issue. However, I must make it clear from the outset that Mr. Dudley Glanfield's claim for compensation from the Central Elec-

tricity Generating Board in respect of pylons on his land is a matter between Mr Glanfield and the board which could only be resolved between them, if necessary by recourse to the appropriate tribunals, and that this is not a matter in which my right hon. Friend the Secretary of State for Energy would wish to intervene.
The hon. Member has received my letter of 1st December 1977, which fully sets out the history of this case as far as my Department is involved. However, I will go over the main points stated in that letter in response to the hon. Member's remarks on this oft-repeated claim, which goes back over 20 years.
In particular, I should like to comment on two points the hon. Gentleman has raised. The first is Mr. Glanfield's complaint that the Minister of Power had signed an irrevocable scheme line consent before the public inquiry was held. I should perhaps explain that before an electricity board can place an electric line above ground, it has to do two things. First, it must obtain the consent of the Secretary of State, under paragraph 10(b) of the schedule to the Electric Lighting (Clauses) Act 1899, to the general route of the line. Such consent is normally accompanied by directions under Section 40(1) of the Town and Country Planning Act 1971 giving the necessary "deemed" planning permission for the erection of the line. Neither of these, however, gives the board any right to place the line over land which it does not own. This right must be obtained by means of a way-leave. Wherever possible, the boards negotiate with the land owners and reach agreement with them voluntarily. Where, however, the board is unable to reach agreement with a land owner, there is a procedure under Section 22 of the Electricity (Supply) Act 1919 under which the board can apply to the Secretary of State for his consent to place the line across a particular piece of land. Such a consent is, in effect, a compulsory wayleave. Before giving his consent, the Secretary of State is required to give all parties concerned an opportunity of being heard.
It is understandable that a land owner should feel that, where the Minister has given consent under Section 10 (b) for a route crossing his land, this will prejudice his position in any subsequent hearing under Section 22 on the question


whether the board should have a wayleave across his land. In practice, Ministers make every effort to see that the landowner is not prejudiced and to consider applications under Section 22 strictly on their merits, without regard to the existence of any previous consent to the route.
This position was, moreover, improved shortly after the occasion to which Mr. Glanfield refers by the inclusion in Section 32 of the Electricity Act 1957 of provisions giving the Minister power to refuse to take a decision on an application for approval of the route of a line until the board has either negotiated all the necessary wayleaves voluntarily or made the necessary applications under Section 22 of the 1919 Act so that the two applications can be considered together.

Mr. Grylls: I am grateful to the Minister for clarifying the law and I know that Ministers make every effort to ensure that the land owner is not prejudiced. This inquiry found for the alternative route. Why was it that the Minister did not accept the alternative route? That is what has bugged Mr. Glanfield for all these years.

Mr. Eadie: The hon. Gentleman is being a little unfair, because it was another Minister who made the decision. As the hon. Gentleman has said, there are a great many documents and papers in this case. I hope that he will agree, since he raised the whole issue of principle, that it was necessary, in reply to what he regards as a very important charge, to explain the law as it is, so that there should be no enduring anxiety or misunderstanding on the part of other people.
I shall try to deal with some of the important points that have been raised. I may not be able to deal with them all, but I want to be as fair, accurate and as helpful as I can to the hon. Gentleman. It was very kind of him to say that I always try to consider any aspect raised by an hon. Member.
In this case, consent had been granted for the construction of this line to the British Electricity Authority, the predecessor of the CEGB, on 27th April 1955. The consent was granted subject to the line being erected between the points shown on the maps which accompanied

the authority's application and along the route delineated on the maps as might be agreed with the owners of land across which the line might be placed, provided that the authority should not deviate laterally from the line of the route on the maps by more than 200 yards without the consent of the Minister.
The authority, having failed to negotiate a wayleave with Mr. Glanfield for the section of the line crossing his land, applied to the Minister under Section 22 of the 1919 Act. A hearing—not a public inquiry—was held by an engineering inspector of the then Ministry of Fuel and Power on 15th December 1955. After considering the inspector's report and recommendations on 28th January 1956 the Minister granted the further consent or compulsory wayleave for the placing of the line across Mr. Glanfield's land.
Under this consent, the authority erected a pylon on Mr. Glanfield's land. In December 1956, however, Mr. Glanfield instituted proceedings against the authority in the High Court, challenging its right to place the pylon or the line on his land and claimed an injunction, damages, and a declaration that the authority did not have the rights which it claimed. The authority delivered a defence to these proceedings. The matter did not, however, come to trial.
As a result of representations made to Lord Mills, then Minister of Fuel and Power, by, in particular, Sir Lionel Heald, Q.C., M.P., to whom the hon. Gentleman referred—whose constituent Mr. Glanfield then was—both parties agreed to withdraw their claims against each other on certain terms, set out in an exchange of correspondence between Messrs. Fladgate and Co., Mr. Glanfield's solicitors, and the solicitor to the authority.
One of the terms set out in this correspondence was that the Minister should be invited to give further impartial consideration to the question of the siting of the line, and that both parties would accept his decision on that consideration. The Minister's decision, which was set out in a letter from Lord Mills to Lord Citrine, the then Chairman of the authority, was that the authority should proceed without further delay to complete the line on the route for which consent had been given. But this decision


was made subject to an undertaking by the authority to implement, at Mr. Glanfield's request, an offer which it had previously made to move the line if certain conditions were fulfilled. One of these was that Mr. Glanfield should build a farmhouse and farm buildings on the site of former buildings immediately underneath the route of the line.
Later correspondence shows that this time limit was subsequently extended by the authority until 31st March 1964, subject to certain additional conditions. According to the board, the conditions relating to the farm buildings were not fulfilled, and the undertaking accordingly lapsed.
In response to what the hon. Gentleman has said I suggest that for Mr. Glanfield to represent these arrangements as an undertaking by the authority to move the pylon after five years merely on payment by him of £2,000—one of the other conditions—is plainly mistaken. If Mr. Glanfield contends to the contrary, he has his remedy in the courts. I would finally suggest, however, that it would be in Mr. Glanfield's best interests to seek professional advice on his various claims and to enter into negotiations with the board with a view to reaching an amicable and final settlement of this matter on the basis of its recent letter of 30th September 1977. This offered to consider a claim for loss of value to the land from the presence of the line.
I have done my best to respond in the spirit in which the hon. Gentleman opened the debate. I hope he will agree that my response has been favourable and reasonable. He has voiced the grievances of his constituent, as he is entitled to do, and as it is his time-honoured right to do. I hope also that the action suggested in the latter part of my letter will be taken, and that, as a consequence, an amicable settlement will be reached.

Mr. Grylls: Will the Minister go a little further and ask the authority to open the negotiations rather than leave it to Mr. Glanfield to take the initiative? Can the Minister use his authority to back up the tentative offer made by the board in

its letter? Will he ask the board to get started on these negotiations as quickly as possible? I realise that the hon. Gentleman, as the Minister, does not want to tell the board how or what to negotiate, but will he use his authority to get things started? After all, the board is responsible to him as the Minister and to the House. Will he ensure that the board gets cracking and does not wait for Mr. Glanfield, who is an elderly gentleman? It has the power and the authority to do so.
Why was it that the Minister refused to put a compulsory wayleave on the alternative route, which went through a neighbour's land? That was the preferred route, preferred by the Minister and by the inquiry. Mr. Glanfield has never had an answer to that. It has been made clear that the reason the Minister came to his decision was the reluctance of the neighbour to agree to its being over his land. I imagine that there could have been a compulsory way-leave on that land.

Mr. Eadie: The hon. Member is asking the same question he asked in an earlier intervention. I thought I had explained to him that there was another Minister at that time. I cannot, therefore, answer that question this evening. If it is possible later, I will.
On his first point, the hon. Member was less than fair in asking me to initiate action. At the outset I said that the Secretary of State would not wish to respond to that. If the hon. Member reads carefully what I have said, since his constituent feels so aggrieved, I suggest that I have opened up substantial grounds for his constituent to take the advice I have given.
I cannot go any further than I have, and I hope that on reflection the hon. Member will agree that I have been helpful in trying to assist him in having his constituent's grievance and complaint resolved.

Question put and agreed to.

Adjourned accordingly at twenty-two minutes past One o'clock.